round prices to 2 decimal places.

a) describe the term cost of carry and benefits of carry. give examples. explain why you also have to consider opportunity costs.

You want to invest in company A and enter a forward contract on 1 January 2024. the current market price per share is USD 40. the risk free rate is 0.2% p.a. The company pays a biannual dividend after q2 and q4. assume the interest rate is constant over time. in 2024, each dividend is USD 2.75

b) calculate the forward price of a forward contract with one year maturity

c)What is the value of this contract after six months if the price of company A has moved to USD 37? What would be the expected price after six months when initiated at t=0?

d) explain if and why your calculated value in c) is different from zero. is the buyer or the seller in a favourable position?

You decide not to buy the one year contract in t=0 and rather invest in a forward contract with three years to maturity. in 2025, the dividends are expected to equal 3.00, while for 2026 we expect a drop to USD 2.00.

e) calculate the forward price of this three years contract.

After two years on 1 January 2026, the price of Company A has increased to USD 58.

f) what would the forward price of new forward contract with maturity of the remaining year be? how is this price related with the forward value of the contract of e) on 1 January 2026?