Value of the forward contract

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Reference no: EM13720992

Value of the forward contract: An investor would like to buy a one-year forward contract on a dividend-paying stock. The stock will pay a $1.75/share dividend in 50 days and another $2.00/share dividend in 140 days. The stock is currently trading at $45 and the risk free rate is 10%.

a) What is the fair forward price?

b) After 60 days, the stock price increases to $48. What is the current value of the forward contract to the investor?

Reference no: EM13720992

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