Stock B Is Trading at $1100

question 3

Multiple Choice

Stock B is trading at $1100. The risk-free rate is 1% for all maturities and the average dividend on the stock is $10 each quarter-end. What is the six-month forward price of the stock, assuming interest calculations are on a continuously-compounded basis?

• A) $1,050.65
• B) $1,085.49
• C) $1,105.51
• D) $1,125.54

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Definitions:

Miles Per Gallon

A measure of fuel economy that represents the number of miles a vehicle can travel on one gallon of fuel.

Gallons

A unit of volume in the US customary and imperial systems, used to measure liquids. One US gallon is equal to approximately 3.785 liters.

Regular Employees

Individuals who are employed by a company on a permanent basis, typically working a standard work week.

Temporary Employees

Workers hired on a short-term basis to fill temporary needs of an employer, often through staffing agencies.