A stock is expected to pay a dividend of $1 per share in 2 months and $1 in 5 months. The stock price is $100, and the risk-free rate of interest is 6% per annum with continuous compounding. 1.a. What should be the forward price for a contract deliverable in 6 months? Do you think this market is an example of contango or backwardation? What is the initial value of the forward contract? 1.b. Another market participant quotes you the 6-month forward price at $105. What arbitrage opportunity exists? If one exists, explicit all cash flows for the arbitrage.