3. (a) Consider a forward contract that matures in 3 months on an asset that has price $40, and assume interest rates are 5% (compounded continuously). Construct portfolios that provide guaranteed profits when the: (i) Forward price is $43 (ii) Forward price is $39 (b) Use no-arbitrage arguments to derive a formula for the forward price Fo of a forward contract (with maturity T) on a stock with spot price So, if the interest rate is r and the stock has a dividend yield of