Question: Consider a long forward contract on a share (stock) with a current price of $59 and the risk-free rate is 0.06 per year (in decimal

Consider a long forward contract on a share (stock) with a current price of $59 and the risk-free rate is 0.06 per year (in decimal places) for all maturities, the stock pays a dividend of $ 0.83 every 0.46 years. The next dividend is due in 0.46 months. What should the 1year forward price be?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Q:

Consider a long forward contract on a share (stock) with a current price of $59 and the risk-free rate is 0.06 per year (in decimal places) for all maturities, the stock pays a dividend of $ 0.83...

Q:

Consider a long forward contract on a share (stock) with a current price of $51 and the risk-free rate is 0.19 per year (in decimal places) for all maturities, the stock pays a dividend of $ 0.72...

Q:

consider a long forward contract on a share ( stock) with a current price of $57 and the risk-free rate is 0.5 per year ( in decimals) for all the maturities, the stock pays a dividend of $0.92 every...

Q:

Consider an 8-month forward contract on Cisco Systems stock. Assume the current price of one share is $95 and the annual, continuously compounded risk-free interest rate is 5%. Answer the following...

Q:

1) Consider a long forward contract to purchase a coupon-bearing bond whose current price is $920. The forward contract matures in 5 months and a coupon payment of $40 is expected in 3 months. The...

Q:

1) Consider a long forward contract to purchase a coupon-bearing bond whose current price is $960. The forward contract matures in 8 months and a coupon payment of $50 is expected in 2 months. The...

Q:

1) Consider a long forward contract to purchase a coupon-bearing bond whose current price is $960. The forward contract matures in 8 months and a coupon payment of $50 is expected in 2 months. The...

Q:

1) Consider a long forward contract to purchase a coupon-bearing bond whose current price is $960. The forward contract matures in 8 months and a coupon payment of $50 is expected in 2 months. The...

Q:

Consider a 7-month forward contract on Apple Computer Inc. (AAPL). The current price of one share is $208, and the annual continuously compounded risk-free interest rate is 5%. Suppose the actual...

Q:

Consider a 7-month forward contract on Apple Computer Inc. (AAPL). The current price of one share is $208, and the annual continuously compounded risk-free interest rate is 5%. Suppose the actual...

Q:

For a process that occurs reversibly and isothermally with 1.99 moles of gas at a temperature of 25C, the final volume was 32% higher than the initial volume. Calculate the work in Joules (J) for...

Q:

Calloway Corporation sells three products: A, B, and C. Calloway estimates that it sells three A's for every two B's and every one C (3:2:1). The budgeted cost information for Calloway's products are...

Q:

In women, fertility declines gradually beginning at age and more rapidly after age 2 5 ; 3 0 3 2 : 3 7 3 5 ; 4 0 4 5 ; 5 2

Q:

( 2 5 points ) ( a ) Considering the binary regular solution of C u - F e shown in Figure 1 , any small negative composition deviation from x C u = 0 . 5 will spontaneously drive b a r ( G ) C u = R...

Q:

=+ 4. How can policymakers infl uence a nations saving rate?

Q:

=+ 5. What has happened to the rate of productivity growth over the past 50 years?

Q:

=+ c. Suppose that some change in government policy reduces the natural rate of unemployment. Using the graph you drew in part (b), describe how this change affects output both