Goldman Sachs stock today has a price of 15 dollars. The annual risk free rate is...
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Goldman Sachs stock today has a price of 15 dollars. The annual risk free rate is 4 %. Suppose the 1 year forward price of Goldman Sachs is 15.2 and the 2 year forward price is 14.5. In each year, the owner of Goldman Sachs stock at the beginning of the year gets the dividends the stock pays. (a) If there is no arbitrage, what is the market price of a claim to the dividends Goldman Sachs pays between now and year 2. (b) What is the market price of a claim to the dividends Goldman Sachs pays in year 2? Goldman Sachs stock today has a price of 15 dollars. The annual risk free rate is 4 %. Suppose the 1 year forward price of Goldman Sachs is 15.2 and the 2 year forward price is 14.5. In each year, the owner of Goldman Sachs stock at the beginning of the year gets the dividends the stock pays. (a) If there is no arbitrage, what is the market price of a claim to the dividends Goldman Sachs pays between now and year 2. (b) What is the market price of a claim to the dividends Goldman Sachs pays in year 2?
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