Apple stock currently trades

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1. Apple stock currently trades at $500/share. The present value of dividends paid in the next 6 months is $24.51 (using risk-free discounting). These dividends are known today with certainty. The yield curve is flat at 4%. What is the fair forward price for a 6 month forward contract on Apple stock?

2. Microsoft stock currently trades at $30/share. Microsoft will pay a $3 dividend in 6 months. The fair forward price on a 1 year contract is $28.68. The price of a 6 months zero coupon bond with $100 face value is $98.06. By no arbitrage, what is the fair forward rate for a loan starting in 6 months and ending in 1 year?

Reference no: EM13927652

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