If Apple costs $130 today, interest rates are 10%, and Apple pays a $3 dividend every year, what is the fair forward price of a five-year forward?
What would the fair forward price be if Apple’s stock price goes up to $150?
For the IBM example earlier, ($100 IBM price today, 2 year forward, 10% interest rates, $5 dividend per year), suppose you bought the forward at the fair forward price of $110.5. Now IBM falls to $80. You want to get out. What is the most you would pay to get out of your forward contract struck at $110.5?