It is now January 1, 3018. You are given: (i) The current price of the stock is
Question:
It is now January 1, 3018. You are given:
(i) The current price of the stock is 1,000.
(ii) The stock pays dividends continuously at a rate proportional to its price. The dividend yield changes throughout the year. In March, June, September, and December, the dividend yield is 3%. In other months, the dividend yield is 2%.
(iii) The continuously compounded risk-free interest rate is 9%
Calculate the price of a 1-year forward contract.
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