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4. Suppose the stock inquestion 2 pays a dividend of $0.225/share per quarter. You expect the dividend to be paid 3, 6, 9, and 12
4. Suppose the stock inquestion 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?
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