3. It is now January 1st, 2019. A one-year long forward contract (for December delivery) on a non- dividend paying stock is entered when the stock price is $50 and the risk-free rate of return is 4% a year.

   1. What is the forward price?

   2. What is the initial value of the contract?

   3. Six months later, on July 1st, the stock is trading at $53 and the interest rate is unchanged.

      What is the forward price now for delivery in December? (Note that it is now the 6-month

      forward price)

   4. (**)What is the value of the contract now, 6 months later (on July 1st)? (Hint: recall that in a

      forward contract, the gain/loss is only realized at maturity.)