Suppose the stock price is $35 and the continuously compounded interest rate is 5%. a. What is

Question:

Suppose the stock price is $35 and the continuously compounded interest rate is 5%.

a. What is the 6-month forward price, assuming dividends are zero?

b. If the 6-month forward price is $35.50, what is the annualized forward premium?

c. If the forward price is $35.50, what is the annualized continuous dividend yield?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...