Price of five month forward contract on the stock

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Reference no: EM131020048

A stock is going to pay a dividend of $1 per share in 3 months. The current stock price is $40, and the interest rate is 5% per year with continuous compounding. What should be the price of a 5-month forward contract on the stock?

a. $39.82

b. $39.83

c. $39.84

d. $40.00

e. $40.84

Reference no: EM131020048

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