Boring Unreliable Gadget Inc s stock price S is $50 today The company, however, reliably pays quarterly dividends to shareholders For example, BUG paid $0 95 dividend one month back it will pay $1 dividend two months from today, $1 05 after five months, $1 10 after eight months, and $1 15 after ele...

Boring Unreliable Gadget Inc.s stock price S is $50 today. The company, however, reliably pays quarterly dividends

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Boring Unreliable Gadget Inc.’s stock price S is $50 today. The company, however, reliably pays quarterly dividends to shareholders. For example, BUG paid $0.95 one month back; it will pay $1 two months from today, $1.05 after five months, $1.10 after eight months, and $1.15 after eleven months. If the continuously compounded interest rate is 4 percent per year, what is the forward price of a six- month forward contract on BUG?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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An Introduction to Derivative Securities Financial Markets and Risk Management

ISBN: 978-0393913071

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Authors: Robert A. Jarrow, Arkadev Chatterjee

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Question Posted: Dec 02, 2015 03:18 AM

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Boring Unreliable Gadget Inc.s stock price S is $50 today. The company, however, reliably pays quarterly dividends

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Dividends paid before the starting date and those paid after the maturit...View the full answer

An Introduction to Derivative Securities Financial Markets and Risk Management

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