Problema 2-year long forward contract on a, Ask an Expert

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A 2-year long forward contract on a non-dividend-paying stock is entered into when the stock price is $135 and the risk-free interest rate is 9.2% per annum with continuous compounding. 1 year later, the price of the stock is $147 and the risk-free rate is 10.6%.

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Question: What is the value of the long forward contract?

Note: Please explain comprehensively and give step by step solution.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91166081

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