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Pricing Equity Forward Contracts

November 16, 2015

FP(on equity security) = (S0 – PVD) x (1 + Rf)^(Days Left In Contract/365)

PVD = Cash Dividend / (1 + Rf)^(Time Until Dividend Received/365)

PVD = Present Value of Dividend

S0 = Spot price of underlying equity at time zero

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From → Asset Valuation

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