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I'm currently review Arbitrage Pricing in Continuous time by Bjork and am stuck on this concept:

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Honestly I'm not too sure where to start as this chapter makes no mention of the Cost of Carry formula for dividend paying assets ( and I am not having any luck online either ).

Thanks

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  • $\begingroup$ Simply put the cost of carry is the financing cost minus the present value of dividends. $\endgroup$
    – nbbo2
    Apr 27, 2023 at 15:38
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    $\begingroup$ As far as I can tell that Hint asks to use the cost of carry formula to show another cost of carry formula. Confusion enough to forget about it. I recommend to develop everything from first principles without reading too much stuff. The formula you want to show corresponds to (3) in my answer. $\endgroup$
    – Kurt G.
    Apr 27, 2023 at 17:52

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