Business, 02.01.2020 18:31, 2016gbryant

You have entered into a long forward contract on a dividend-paying stock some time ago, and this will expire in six months. it has a delivery price of $40 and the current stock price is $35. the stock provides a fixed dividend yield of 8% with semi-annual compounding. if the risk-free rate is 12% per annum with continuous compounding, what is the value of this long forward contract?

a. $6.72

b. -$4.02

c. $4.02

d. -$6.72

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You have entered into a long forward contract on a dividend-paying stock some time ago, and this wil...