Jane is a portfolio manager for ABC Capital. She forecasts that the common stock of XYZ Corp, which ABC intends to buy, and which is now priced at $60, will most probably increase in the near future and plans to buy it in 120 days. Two dividend payments of $1.00/share each are expected on XYZ stock, one in 20 days and one in 110 days. The risk free rate is 4% on a continuous compounding basis.

2. The forward price of a contract on XYZ stock which is established today and expires in 120 days is closest to:

a) $62.8064

b) $60.7943

c) $58.7822