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Today you enter into 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 5% per annum with continuous compounding.

a) What is the forward price?

B) Eight months later, the price of the stock turnsout to be $55 and the risk-free interest rate is still 5%. What is the value of the forward contract for you at this point?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92055282

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