The current price of a share of stock is 5 and the stock is, Ask an Expert

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The current price of a share of stock is 5, and the stock is expected to pay a dividend of 1 per share in 2 months and again in 5 months. The risk free annual effective rate of interest is 6%.

A) calculate the fair price of a 6 month forward contract.

B) at time 3 months from now, suppose the stock price is 57. Compute the fair price of the same forward contract at that time.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9868917

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