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If this contract could be prepaid today how much should it

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Reference no: EM132020111

Suppose XYZ stock costs $100/share today and is expected to pay $1.25/share quarterly dividend with the first coming 3 months from today and the last just prior to the end of the year (from today).

Price a one-year forward contract on the XYZ stock if you know that the annual continuously compounded risk-free rate is 10%. If this contract could be prepaid today how much should it cost?

Reference no: EM132020111

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