Thanks in advance for your help!
Question 95, regarding Beth Knight, and David Royal. THis question is on multi stage discount dividend model, with different growth rates.
I’m confused on the denominators for the 3rd step in knight and second step for royal.
Why is knights denominator (1.09)^2? shouldn’t it be to the 3rd power?
Why is Royal’s just 1.10, and not to the 2nd power?
Question 112, if a PM holds al ong on a forward contract on 20 million face value 81 days t-bills priced at 1.85% on a discount basis. At settlement, 81 day t-bills are priced at 1.95% on a disocount basis. If the contracts settles in cash, at settle the pm will:
I know its $4,500, but why does he pay $4,500 and not receive?