You have entered into a SHORT forward contract on a dividend-paying stock some time ago, and this will expire in 2 years. It has a delivery price of $40 and the current stock price is$45. It provides a fixed dividend yield of 5% with annual compounding. If the risk-free rate is 8% per annum with continuous compounding for all maturities,answer the following question:

1) What should be the (new) 2-year forward price for no arbitrage opportunity?

2) What is the value of this SHORT forward contract?

*use at least 6 decimal places

1) (new)2-YEAR FORWARD PRICE =48.50

1)(new)2-YEAR FORWARD PRICE=47.90

1)(new)2-YEAR FORWARD PRICE=40.90

1)(new)2-YEAR FORWARD PRICE=45.50

2) VALUE OF THE SHORT FORWARD CONTRACT =-8.90

2)VALUE OF THE SHORT FORWARD CONTRACT =8.90

2)VALUE OF THE SHORT FORWARD CONTRACT =-6.73

2)VALUE OF THE SHORT FORWARD CONTRACT =+6.73