Question: 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

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.

Suppose that the forward price of a forward contract on XYZ stock with 120 days to the delivery date is $60. On the delivery date, if the stock price is 62.00, the value of a short forward position is:




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