A certain stock costs RM53.76 today and will pay an annual dividend of RM1.76 for the next 4 years. An investor wishes to purchase a 4-year forward contract for this stock. The first dividend will be paid one year from today and the last dividend will be paid just prior to delivery of the stock. The continuously compounded risk-free interest rate is 3.57% per annum. 

Calculate the forward price of the contract.

Answer rating: 100% (QA)

To calculate the forward price of the contract we need to consider the present value of the dividend... View the full answer