Question: Problem FORW-39H LR2023-10 It is given that S(0) = $100. This is the share price today (time 07) of XYZ stock. 6 =5%p.a. This is

Problem FORW-39H LR2023-10 It is given that S(0) = $100. This is the share price today (\"time 07) of XYZ stock. 6 =5%p.a. This is the growth rate of the number of shares Using continuous under reinvestment of dividends (using a 365-day year). gggjrgi-lengg%#\\.}f{-%gh F(0,T) = $101. This is the forward price for delivery of 1 share 220 days from now (\"time 1). (a) Show how synthetic lending over 220 days can be obtained. You need to hold shares (long or short) and one zero-downpayment forward contract, long or short. Time-T value (b) What is the implied annual interest rate, expressed as a continuously-compounded rate (using a 365 day year)? (c) Show how synthetic lending over 220 days can be obtained. You need to start with a (long or short) position in 1 share of stock plus a (long or short) position in zero- downpayment forward contracts. Time-0 value ($) e _ (cash outflow) Time-T value (3)

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