Find the price of a prepaid four year forward contract

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Reference no: EM13950267

The current price of a stock is 100 and the continuously compounded interest rate is 4%. A dividend will be paid every quarter for the next 4 years, with the first divident paid 3 months from now. The amount of the first divident is 2, and each subsequent dividend will be .75% higher than the previous dividend. Find the price of a prepaid four year forward contract to purchase the stock for delivery in four years.

A 117.35 B 101.35 C 101.35 D 86.26 E 68.91

Reference no: EM13950267

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