A $50 stock pays an 8% continuous dividend. The continuously compounded riskfree rate is 6%. a. What

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A $50 stock pays an 8% continuous dividend. The continuously compounded riskfree rate is 6%.

a. What is the price of a prepaid forward contract that expires 1 year from today?

b. What is the price of a forward contract that expires at the same time?

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Derivatives Markets

ISBN: 9789332536746

3rd Edition

Authors: Robert McDonald

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Question Posted: Aug 12, 2015 02:34 AM

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A $50 stock pays an 8% continuous dividend. The continuously compounded riskfree rate is 6%. a. What

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a The owner of the stock is entitled to receive dividends We have to offse...View the full answer

Derivatives Markets

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