= Prepaid forward contract
{title2=$V_t=S_t e^{-q(T-t)}$}
A prepaid forward pays for delivery of an asset at a future time entirely in advance. In the <Black-Scholes model> with deterministic <continuous dividend yield> $q$, one share delivered at $T$ costs the displayed amount at $t$. Reinvesting the dividends on $e^{-q(T-t)}$ shares replicates one terminal share. An ordinary <forward contract> instead has no initial payment and a delivery payment fixed in advance; at constant <interest rate> $r$ its fair delivery price is $S_te^{(r-q)(T-t)}$.
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