Question: Problem 4 Suppose that the current value of one share of DIA is USD 290. Assume that the annual rates of interest in USD and

Problem 4 Suppose that the current value of one share of DIA is USD 290. Assume that the annual rates of interest in USD and British Pound (GBP) are respectively 1% and 3% on a continuously compounded basis, and that DIA pays a continuously compounded annual dividend rate of 1.5%. The spot exchange rate is USD 1.25 per GBP. a) Compute the forward price of DIA in USD for delivery in six months. b) Compute the forward price (exchange rate) of GBP in USD for delivery in six months. c) Compute the forward price of DIA in GBP for delivery in six months

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