What should be the new 2-year forward price for no


You have entered into a SHORT forward contract on a dividend-paying stock some time ago, and this will expire in 2 years. It has a delivery price of $40 and the current stock price is $45. It provides a fixed dividend yield of 5% with annual compounding. If the risk-free rate is 8% per annum with continuous compounding for all maturities, answer the following question: 1) What should be the (new) 2-year forward price for no arbitrage opportunity? 2) What is the value of this SHORT forward contract? Use at least 6 decimal places

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Financial Management: What should be the new 2-year forward price for no
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