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Find the six-month forward price-world top gloves

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Reference no: EM132714295

The World top gloves's share is expected to pay a dividend of $1 per share in two months and in five months. Currently the stock price is $50, and the risk-free rate of interest is 8% per annum with continuous compounding for all maturities. An investor has just taken a short position in a six-month forward contract on this stock.

i) What are the six-month forward price and the initial value of the forward contract?

ii) Three months later, the price of the stock is $48 and the risk-free rate of interest is still 8% per annum. What are the forward price and the value of the short position in the forward contract?

Reference no: EM132714295

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