(Answered) Problem a one-year long forward contract on a

Management Studies

Problem: A one-year long forward contract on a non-dividend-paying stock is entered into when the stock price is $50 and the risk-free rate of interest is 7% per annum with continuous compounding. What are the forward price and the initial value of the forward contract? Nine months later, the price of the stock is $45 and the risk-free interest rate is still 7%. What are the forward price and the value of the forward contract?

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Business Management, Management Studies

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