Calculate the fair delivery price for the forward contract. A forward contract to deliver 1,000 TST shares in nine month's time. TST is currently trading at $10 and is expected to pay a dividend of $0.90 in exactly five month's time.
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Calculate the fair delivery price for the forward contract.
A forward contract to deliver 1,000 TST shares in nine month's time. TST is currently trading at $10 and is expected to pay a dividend of $0.90 in exactly five month's time. The risk-free rate of interest is 6% p.a
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- A one-year long forward contract on a non-dividend-paying stock is entered into when the stock price is $40 and the risk-free rate of interest is 10% per annum with continuous compounding. (a) What are the forward price and the initial value of the forward contract? (b) Six months later, the price of the stock is $45 and the risk-free interest rate is still 10%. What are the forward price and the value of the forward contract?A stock is expected to pay a dividend of $1 per share in 2 months and in 5 months. The stock price is $60, and the risk-free rate of interest is 5% per annum with continuous compounding for all maturities. An investor has just taken a short position in a 6-month 1. What are the forward price and the initial value of the forward contract? [Hint: what's the value of a forward contract at the initiation of the contract? 2.Three months later, the price of the stock is $52 and the risk-free rate of interest is still 8% per annum. What is the forward price of a new forward contract with the same expiration date as above? What is the value of the short position in the oldThe price of a stock is currently $200 per share. It'll pay a dividend of $0.85 every 3 months (the next dividend will occur 3 months from now). 3-month and 5-month risk free interest rates are 0.2% and 0.25%, respectively. All rates are annual rates with continuous compounding. What should be the delivery price of a 5-month forward contract so that the contract is of zero cost? Keep 2 digits in your final answer. Do not include $ sign.
- A forward contract with 8 months to maturity is written on an underlying share. The market price of the share is $34, and it is expected to pay dividends of $1.40 after 2 months and $2 immediately prior to maturity of the forward. The relevant riskless rate of interest is 4%. Calculate the theoretical forward price and initial value of the forward contract and explain the forward pricing relationship.A short forward contract on ABC stock that was negotiated some time ago will expire in six months and has a delivery price of $50. ABC stock has a market price of $52 and will pay a dividend of $2 in 4 months. The risk-free interest rate with continuous compounding is 5%. What is the value of the short forward contract? a. -$1.27 b. +$1.27 c. -$3.24ABC Corporation plans to purchase a call option for 1,000 Red Corp. ordinary shares at a strike price of P489 per share. The contract will be exercisable four months from purchase. The details about the underlying asset are as follows: Market value per share 534.00 Volatility 10% Risk-free rate 3% If the call option is currently selling at P40,000, it is currently over or (under) valued by how much? Use 360 days in a year.
- Assume an investor bought a one-year forward contract with price F0(T) = 110. Six months later, at Time t = 0.5, the price of the stock is S0.5 = 115 and the interest rate is 4%. The value of the existing forward contract expiring in six months will be closest to: * 5. 7. -7.the multiplier of a futures contract on the stock market index is $250. The maturity of the contract is one year. The current level of the index is 2600 , and the risk free interest rate is .2% per month. The dividend yield on the index is ..4% per month. Suppose that after five months, the stock index is at $2533. Assume that the party condition always hold exactly. Find the holding period return for the short position if the initial margin of the contract is 10% of the original contract value.Consider a non-dividend paying stock that is currently trading at Rs.540. You entered into a short forward contract some time back at a strike price of Rs.595. The continuously compounded risk-free rate is 8% per annum and currently it has 9 months to maturity. The current forward price should be __________and value of the forward contract is_______. Rounded off to three decimal places.
- A stock has a spot price of $200. The stock pays a $5 dividend in 6 months. The continuous compounding risk-free rate for all maturities is 9%. What is the equilibrium price of a 2-year forward contract?Assume that we entered into a one-year forward contract with price $300 today. Nine months later, the observed price of the stock is $350 and the interest rate is 8% per annum. The value of the existing forward contract expiring in three months will be closest to: A. 49.05. B. 55.72. C. –55.72. D. −49.05.Suppose a trader opens a short position in two rice futures contracts. Each contract is for 5,000 kilograms. The initial margin is TZS 2,000,000 per contract, and the contract expires in 100 says. Suppose the future price decreases by TZS 500 per Kilogram per day for the first 10 days, then increases by TZS 750 per kilogram per day for the next 5 days. REQUIRED: Estimate the following: The initial margin to be deposited with clearing house The total gain/loss due to price decreases The total gain/loss due to price increase The balance in the trader's margin a/c after 15 day