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CFA Level 2
Derivatives

Forward Price Calculation of an Equity Forward Contract

Very Hard Forward Pricing And Valuation Equity Forwards

A financial analyst is valuing a forward contract on a stock that is trading at $100. The stock is expected to pay a dividend of $5 in one year, and it is anticipated that the stock price will grow at a continuous rate of 6% annually. The risk-free rate is currently at 4%. What is the correct forward price for a contract that matures in one year?

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