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Problem:

A stock is expected to pay a dividend of $20 per share in 1 months and in 4 months. The stock price is $51, and the risk-free interest rate is 9% per annum with continuous compounding for all maturities. An investor has just taken a long position in a 5-month forward contract on the stock.

Required:

Question: What is the forward price?

Note: Please show the work not just the answer.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91148529

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