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CFA Level 2
Derivatives

Calculate Equity Forward Price

Easy Forward Pricing And Valuation Equity Forwards

Company X is evaluating the use of a forward contract to hedge its equity investment in Company Y, which is expected to pay a dividend of $3 per share in one year. The current price of Company Y's stock is $50, and the risk-free rate of return is 2% per annum. Calculate the forward price of the equity forward contract for delivery in one year.

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