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A forward on a stock that pays a dividend · Part 2 of 3
A stock trades at $50. The riskless rate is 4% a year, continuously compounded, and you are pricing a one-year forward contract on one share.
Instead, the stock will pay a $1 dividend in six months. What is the fair one-year forward price now?
Answer with a number. Fractions, powers and expressions like 23/6 or C(52,5) are read correctly in practice.
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