A stock is trading at $40. The market consensus expectation is that it will pay a dividend
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A stock is trading at $40. The market consensus expectation is that it will pay a dividend of $1 in one month and $2 in four months' time. Assume interest rates are constant at 5% per annum for all maturities (continuous compounding). You enter into a long forward position to buy 1,000 shares of stock in six months' time. After two months, the stock is trading at $45. What is the value of your total forward contract position?
Related Book For
Introduction to Derivatives and Risk Management
ISBN: 978-1305104969
10th edition
Authors: Don M. Chance
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