Suppose the stock in question 2 pays a dividend of $0.225/share per quarter. You expect the dividend to be paid 3, 6, 9, and 12 months into the life of the forward. The appropriate risk-free rate for all maturities up to 1-year is 2.02%, compounded annually. What is the price of the forward?

Answer rating: 100% (QA)

To calculate the price of the forward we need to discount the expected future dividends to their pre... View the full answer