KMW, Inc. plans to pay a dividend of $0.50 per share both 3 and 6 months from today.
KMWs share price today is $36.00 and the continuously compounded interest rate is 6%. What is the prepaid forward price for a 6-month prepaid forward contract, which expires immediately after the second dividend?
(a) $35.00
(b) $35.02
(c) $36.98
(d) $37.00
(e) None of the above.