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  3. stock y has the current price of $45. in three mon

Stock Y has the current price of $45. In three months, it will pay a...

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Finance

Stock Y has the current price of $45. In three months, it will pay a dividend of $2.
The market beta of Stock Y is 0.8, the average market return is 12% per annum,
and the risk-free rate is 5%. If you go long in the futures on Stock Y today, what
will be your expected profit in a three months? (Hint #1: Compute the futures
price, compute the expected stock price in three months, and then the profit from
the futures in three months will be obvious. Hint #2: Remember about the dividend
in both steps!)

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