Question: Please show excel formulas A stock is expected to pay a dividend of $1 per share in two months and five months . The stock
| Please show excel formulas A stock is expected to pay a dividend of $1 per share in two months and five months . The stock price is $50, and the risk-free rate of interest is 8% per annum with continuous compounding for all maturities. An investor has just taken a short position in a six-month forward contract on the stock. | ||||||
| Dividend per share | $1.00 | |||||
| Number of months to first dividend | 2 | |||||
| Number of months to second dividend | 5 | |||||
| Stock price | $50.00 | |||||
| Risk-free rate (per annum) | 8% | |||||
| Time to maturity of contract (months) | 6 | |||||
| What is the present value of the income from the security? | ||||||
| What is the forward price of the forward contract? | ||||||
| What is the initial value of the forward contract? | ||||||
| Three months later, the price of the stock s $48 and the risk-free rate of interest is still 8% per annum. | ||||||
| Time to maturity of contract (months) | 3 | |||||
| Stock price | $48.00 | |||||
| Risk-free rate (per annum) | 8% | |||||
| What is the present value of the income from the security now? | ||||||
| What is the forward price of the forward contract now? | ||||||
| What is the value of the forward contract now? | ||||||
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