The current price of a stock paying no income is 30. Assume the annually compounded zero rate will be 3% for the next 2 years. (a) Find the current value of a forward contract on the stock if the delivery price is 25 and maturity is in 2 years. (b) If the stock has price 35 at maturity, find the value of the forward from part (a) to the long counterparty at maturity

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Q: A certian stock pays dividends continuously at a rate of 6 per year. The current price of the stock…

A: Current stock price = S Dividend yield rate = δ r = Risk free rate F = Forward price n = Duration

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A: a) Formula:

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Q: Suppose the stock price is $ 95 and the continously compounded interest rate is 7 %. a) What is the…

A: Stock price (S) = $95 r = 7% T = 6 months = 0.5 years

Q: A stock is currently priced at $40. The risk-free rate of interest is 8% p.a. compounded…

A: Forward contract is a derivative contract which allows to buy or sell the underlying at a specified…

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Q: In two-months the price of stock will be either $23 or $27. The risk-free interest rate is 10%. The…

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A: Current Price =$16.40 Risk free rate = 3% Time period in Future cantract will mature = 6 months

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Q: A stock is expected to pay a dividend of $3 in eight months. A one-year long forward contract on the…

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A:

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Q: The stocks of Cee Mobile Limited is currently trading at $73 each. The call option on the company’s…

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A: Call pay off = Share price - Strike price = (20 * 120%) - 20 = $4   Put pay off = Stike price -…

Q: The spot price of a share of XYZ stock is $100. The annual risk-free continuously compounded…

A: Call option buyer receives the right to buy from the option writer.

Q: For a nondividend-paying stock, you are given: i) The current stock price is 100 ii) At the end of…

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A:

Q: Suppose that a stock, APA, is currently trading at $99.50, and will pay a $1.01 dividend in two…

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Q: The risk-free rate is 2.5%. And the AAP Corporation currently trades at $200. Ignore transaction…

A: Given,  The risk free rate is 2.5% Spot price is $200 Strike price is $220

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A: Forward contract- It is an over-the-counter derivative contract between the two parties to buy or…

Q: A non-dividend-paying stock is currently selling for $50, and the risk-free rate of interest is 8%…

A: formula for forward price: F0=S0×er×twhere,S0=current stock pricer=risk free ratet= time in years

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A: a. Calculation of the initial future price at the current level is as follows:   Calculation of the…

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A: In the given question we require to calculate the value of Put option. We can calculate the price of…