Suppose stock A is priced at $30/share and the company will pay a dividend of $0.30/share after two months. An investor purchases 100 shares of A and invests all dividends received at a continuosuly compunded risk-free rate of 5%. After 3 months the stock is sold when the price is $35.40/share. Calculate the 3-month profit.
Suppose stock A is priced at $30/share and the company will pay a dividend of $0.30/share after two months. An investor purchases 100 shares of A and invests all dividends received at a continuosuly compunded risk-free rate of 5%. After 3 months the stock is sold when the price is $35.40/share. Calculate the 3-month profit.
Intermediate Algebra
10th Edition
ISBN:9781285195728
Author:Jerome E. Kaufmann, Karen L. Schwitters
Publisher:Jerome E. Kaufmann, Karen L. Schwitters
Chapter11: Exponential And Logarithmic Functions
Section11.2: Applications Of Exponential Functions
Problem 27PS
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Suppose stock A is priced at $30/share and the company will pay a dividend of $0.30/share after two months. An investor purchases 100 shares of A and invests all dividends received at a continuosuly compunded risk-free rate of 5%. After 3 months the stock is sold when the price is $35.40/share. Calculate the 3-month profit.
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