alleryStart learning →Share 1,000; risk-free rate 10%; dividend 40 paid at year end. One-year forward price?
A1,100
B1,060
C1,140
D1,040
Answer & Solution
Correct answer: B. 1,060
Carry the spot to 1,100 at 10% and subtract the 40 dividend the spot holder receives: 1,060.
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