A stock's current price is 202 and it has declared dividends of $0.7/share each to be...
A stock's current price is 202 and it has declared dividends of $0.7/share each to be paid in 38 days, 158 days, and 278 days from now. Price a 300-day forward contract assuming that the risk free rate is 2%.
Provide the forward price rounded to two decimals.
Homework Answers
=(Current Price-Present Value of Dividends)*(1+r)^maturity
=(202-0.7/(1+2%)^(38/365)-0.7/(1+2%)^(158/365)-0.7/(1+2%)^(278/365))*(1+2%)^(300/365)
=203.20
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