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It is 9 July 2021. Shares in Contact Energy are trading at $8.38. You anticipate that the company will pay a 23 cent dividend on

It is 9 July 2021. Shares in Contact Energy are trading at $8.38. You anticipate that the company will pay a 23 cent dividend on 26 August, and a 14 cent dividend on 12 March 2022. Interest rates (with continuous compounding) are 0.35%.

(a) What is a fair one year forward price for a Contact share?

(b) Suppose you are offffered a one year forward price on Contact of $8. What is the arbitrage opportunity? Detail your cash flflows from exploiting the arbitrage.

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