1. You are expecting to receive an inheritance in 6 months and wish to use a long position in a forward contract to pre-invest the proceeds. A dealer offers a forward contract for 1,000 shares of Gargantuan Industries. The current price of Gargantuan is $89 per share and Gargantuan is expected to pay dividends per share over the next 6 months with a present value of $4.56 per share.
   1. If the risk-free rate is 3.80% compounded annually, what is the no-arbitrage forward price per share for the 6-month forward contract?

b. Two months later the price of Gargantuan Industries is $92.25 per share and the risk-free rate is still 3.80%. What is the value of your 1,000 share forward position?