Forward price > \\$40.5 leads to arbitrage. - Forward price \\( <\\$ 40.5 \\) leads to arbitrage. - "If there is no arbitrage, it must be that ..." - No-arbitrage forward price \\( =\\$ 40 \\times(1.05)^{2.25} \\). - General conclusion: \\( F_{0}=S_{0} \\times(1+r)^{T} \\). - \\( F_{0} \\) differs from \\( S_{0} \\) by time value of money. - Intuition: forward is a delayed transaction