With Enron, shareholders thought the value of their investments was growing, but the reality is that fraudulent actions were taking place. How does Sarbanes-Oxley (SOX) pA stock is expected to pay a dividend of $1.50 per share in one months and in 4 months. The stock price is $50, and the risk-free rate of interest is 7% per annum with continuous compounding for all maturities. An investor has just taken a long position in a six-month forward contract on the stock.
Three months later, the price of the stock is $45 and the risk-free rate of interest is still 7% per annum. What is the value of the short position in the forward contract protect investors?