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A stock is expected to pay a dividend of $0.80 per share in two months, in...

A stock is expected to pay a dividend of $0.80 per share in two months, in five months and in eight
months. The stock price is $35, and the risk-free rate of interest is 8% per annum with continuous
compounding for all maturities. You have just taken a long position in a nine-month forward contract
on the stock. Seven months later, the price of the stock has become $38 and the risk-free rate of
interest is still 8% per annum. What is the value your position seven months later?

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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