(Solution) - Suppose the stock price is 35 and the continuously compounded -(2025 Original AI-Free Solution)

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Academic Level: Undergrad. (yrs 3-4)

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Suppose the stock price is $35 and the continuously compounded interest rate is 5%.
a. What is the 6-month forward price, assuming dividends are zero?
b. If the 6-month forward price is $35.50, what is the annualized forward premium?
c. If the forward price is $35.50, what is the annualized continuous dividend yield?