4. Suppose the stock in question 2 pays a dividend of $0.225/share per quarter. You expect the

dividend to be paid 3, 6, 9, and 12 months into the life of the forward. The appropriate risk-free rate

for all maturities up to 1-year is 2.02%, compounded annually. What is the price of the forward?

5. In question 4 above, you find the 1-year forward selling for $25. How would you set up an arbitrage

trade and how much profit could you make?