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  3. 1) a $34 stock pays a continuous dividend of

1) A $34 stock pays a continuous dividend of 9%....

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Question

Finance

1)

A $34 stock pays a continuous dividend of 9%. The continuously compounded risk-free rate is 8%. What is the price of a prepaid forward contract that expires 12 months from today?
Answers: a.

$37.20
b.

$34.34
c.

$33.66
d.

$31.07
e.

$32.08

2)

A $65 stock pays a continuous dividend of 8%. The continuously compounded risk-free rate is 9%. What is the price of a forward contract that expires 4 months from today?
Answers: a.

$66.76
b.

$63.29
c.

$63.56
d.

$64.78
e.

$65.22

Please show me necessary formulas and step by step on how to get the correct answer. Thank you!

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