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Compute the forward price of DIA in USD for delivery

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Question - Suppose that the current value of one share of DIA is USD 350. Assume that the annual rates of interest in USD and Euros (EUR) are respectively 2% and 1% on a continuously compounded basis. DIA pays a continuously compounded annual dividend rate of 1%, and the spot exchange rate is USD 1.2 per EUR.

a) Compute the forward price of DIA in USD for delivery in one year.

b) Compute the forward price (exchange rate) of EUR in USD for delivery in one year.

c) Compute the forward price of DIA in EUR for delivery in one year.

Reference no: EM132918726

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