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You are given: (i) The current price of a stock is $40. (ii) A one-year forward contract on the stock has a price of $42.

You are given:

(i) The current price of a stock is $40.

(ii) A one-year forward contract on the stock has a price of $42.

(iii) The stock is expected to pay a dividend of $1 six months from now and a dividend of $ 1.5 one year from now, immediately before the one-year forward contract expires.

Find the positive effective annual risk-free interest rate

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