What is the value of the long position in forward contract

Reference no: EM133377674

Question: A stock is expected to pay a dividend of 5 kr per share in three months. The stock price is 80 kr, and the risk-free rate of interest is 10% per annum with continuous compounding for all maturities. An investor has just taken a long position in a six-month forward contract on the stock. Four months later, the price of the stock is 85 kr and the risk-free rate of interest is still 10% per annum. What is the value of the long position in the forward contract? Now take your answer, multiply with 10, and round off to nearest integer. So if for example you have calculated the value to be 56.78 you should answer with 568

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Reference no: EM133377674

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