Question: hello are you able to help me solve this question? You are interested in the IFID-stock that pays out dividends of 5$ in 5 months
hello are you able to help me solve this question?
You are interested in the IFID-stock that pays out dividends of 5$ in 5 months and 5$ in 10 months time. The stock price is 81$, and the risk-free rate of interest is 15% per annum with continuous compounding for all maturities. You decide to take a long position in a 12 months forward contract on the IFID stock. Four months later, the price of the stock has increased to 88 $. The interest rate is still 15% per annum with continuous compounding for all maturities. What is the value of your long position in the forward contract?
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