4. On January 1st a share has a price of 45 and is expected to pay a dividend of 5 on June 30th and a further dividend of 7.50 on December 31st. The relevant risk-free interest rate is 2% per annum with continuous compounding. a. What should be the price of a forward contract, written on this share, which matures immediately after the second dividend is paid and what is the initial value of the forward contract? (40 marks) b. On July 1st the share is trading at 50. What will be the new forward price and the current value of the short forward position which was opened on January 15? (40 marks) c. Explain why the prices and valuations in parts (a) and (b) must hold. (20 marks) 4. On January 1st a share has a price of 45 and is expected to pay a dividend of 5 on June 30th and a further dividend of 7.50 on December 31st. The relevant risk-free interest rate is 2% per annum with continuous compounding. a. What should be the price of a forward contract, written on this share, which matures immediately after the second dividend is paid and what is the initial value of the forward contract? (40 marks) b. On July 1st the share is trading at 50. What will be the new forward price and the current value of the short forward position which was opened on January 15? (40 marks) c. Explain why the prices and valuations in parts (a) and (b) must hold. (20 marks)