Question: kindly answer the question as soon as possible your answer will be rated expiration? Q.2 assume that you own a dividend-paying stock currently worth $120.
kindly answer the question as soon as possible your answer will be rated
expiration? Q.2 assume that you own a dividend-paying stock currently worth $120. You plan to sell the stock in 250 days. In order to hedge against a possible price decline, you wish to take a short position in a forward contract that expires in 250 days. The risk-free rate is 5.25 over the next 250 days; the stock will pay dividends according to the following schedule: Days to Next Dividend Dividends per Share 30 $2.25 120 $2.25 210 $2.25 A. Calculate the forward price of a contract established today and expiring in 250 days. B. It is now 100 days since you entered the forward contract. The stock price is $1 15. Calculate the value of the forward contract at this point. C. At expiration, the price of the stock is $130. Calculate the value of the forward contract at expiration
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
