KMW,IncPlans to Pay a Dividend of $0

question 20

Multiple Choice

KMW,Inc.plans to pay a dividend of $0.50 per share both 3 and 6 months from today.KMW's share price today is $36.00 and the continuously compounded quarterly interest rate is 1.5%.What is the price of a 6-month prepaid forward contract,which expires immediately after the second dividend?

• A) $35.00
• B) $35.02
• C) $36.98
• D) $37.00

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Definitions:

Epson Salts

Likely a typographical error for Epsom salts, a chemical compound known as magnesium sulfate used in baths to relieve sore muscles.

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A glycopeptide antibiotic used to treat serious bacterial infections caused by gram-positive bacteria, often in situations where other antibiotics are ineffective.

Reconstitution

The process of mixing a liquid, typically water, with a dry powdered substance to return it to its liquid form.

Drug Concentration

The amount of a drug in a given volume of solution or mixture, often expressed in mg/mL or other units of measurement.