Stock is expected to pay a dividend-calculate forward price

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Reference no: EM13811534

1) A stock is expected to pay a dividend of $2.20 per share in 1 months and in 4 months. The current stock price is $51, and the risk-free interest rate is 6% per annum with continuous compounding for all maturities. An investor has just taken a long position in a 5-month forward contract on the stock. Calculate the forward price.

2) Suppose an investor entered into a long forward contract and also entered into a long futures contract. Which statement is true?

3) A company enters into a long futures contract to buy 200 ounces of gold for $1,278 per ounce. The initial margin is $4,000 and the maintenance margin is $1,000. What gold futures price per ounce will trigger a margin call? (Margin of error: +/- $1)

4) It is April and a trader buys 100 September put options with a strike price of $21. The stock price is $17.2 and the option price is $4.44.

At the expiration, the stock price becomes $18.8. Calculate the option profit to the trader.

Reference no: EM13811534

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