Eight-month forward contract on a stock


Evaluate an eight-month forward contract on a stock with a price of $98/share. The delivery date is eight months hence. The firm is expected to pay a $1.85/share dividend in four months time. The risk free interest rate is 4.25% up to six months and 4.5% for eight months. Calculate the theoretical forward price to the nearest cent.

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Finance Basics: Eight-month forward contract on a stock
Reference No:- TGS042371

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