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A stock is expected to pay a dividend of $1.50 per share in 3 months and a dividend of $1 per share in 5 months. The Stock Price is $70, and the risk free rate is 5% per annum with the continuous compounding for all maturities. An investor has just taken a long position in a 6-month forward contract on this stock.
a) What are the forward price and the initial value of the forward contract?
b) Three months later, the price of the stock is $65 and the risk – free rate of interest is still 5 % per annum. What are the forward price and the value of the long position in the forward contract?
What is the cost percentage of a new common stock issue?
In 1999, the euro was trading at $0.90 per euro. If the euro is now trading at $1.16 per euro, what is the percentage change in the euro’s value? Is this an appreciation or depreciation?
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Brothers, Mark and Mike Lalla want to plan for their retirement and need your advice. Mark plans to travel extensively in the first 5 years of his retirement and will need $450,000 each year to do so. After that he will be able to live on $100,000 pe..
Calculate the expected return and variance of return and calculate the expected return and variance of return for a portfolio where 20% of your wealth is invested in AA, 30% in BB, and 50% in CC.
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