QUESTION 36 The stock of company X currently trades at £58.00. The risk-free interest rate is 5% per annum. Consider a forward written on the stock with a maturity of 6 months. The company will pay a...

QUESTION 36

The stock of company X currently trades at £58.00. The risk-free interest rate is 5% per annum. Consider a forward written on the stock with a maturity of 6 months. The company will pay a dividend of £5.00 shortly before the maturity of the forward. The no-arbitrage forward price is closest to:

A. £54.40

B. £55.90

C. £58.00

D. £59.40

QUESTION 37

Which of the following statements is most accurate?

A. It is never optimal to exercise an American call option on an index early

B. It is never optimal to exercise an American put option on gold early

C. It is never optimal to exercise an American put option on a currency early

D. None of the above