Consider a $2-$year forward contract on a non$-$dividend$-$paying stock. The stock is currently $120/$ The riskfree rate is $5\%$ for all maturities.

a$.$ What is the forward price?

b$.$ What is the value of the contract that has just been created?

c$.$ Why is the forward price obtained in a$.$ correct? Give arguments as to why it could not be

any other price.

d$.$ If you take a long position on a forward contract on $50$ stocks. What would be your payoff in

two years if$,$ at that time, the spot price is $60$