Walter is interested in shares in Flynn Ltd. Walter would like to enter a short forward position on 1 share in Flynn Ltd with counterparty Jonathan, to be executed in 8 months time. The current price for a share in Flynn Ltd is $45. The risk-free rate of return is 3% p.a. compounding continuously, and anyone on the market is free to lend or borrow at this rate. For this question, ignore any transaction fees, taxes, and other expenses. a) Once Walter and Jonathan enter into the forward contract described above, has Walter agreed to buy a share, or sell a share, in 8 months time? [1 mark] b) Calculate the arbitrage-free forward price that Walter and Jonathan should use in their forward contract using the information provided above. [2 marks] c) Suppose that Walter and Jonathan have agreed to the forward price you calculated in part b), and 5 months have passed. The price for a share in Flynn Ltd. is now $48, and the risk-free rate of return is now 5% p.a. compounding continuously. What is the value of this contract from Walters perspective? [4 marks] d) Given your results in part c), what is the value of the forward contract from Jonathans perspective? [1 mark] e) Walter, thinking back to when he first entered the contract with Jonathan, remembered a particular trader named Isa. Isa was willing to write forward contracts, long or short, to be executed in 8 months, for a forward price of $45.50. Using your result from part b), describe how Walter could have traded with Isa to make an arbitrage profit. Note: you do NOT need to perform any calculations for this part.