You want to invest in a company and enter a forward contract on January 1st 2025. The current market price per share is $40. The risk free rate is 4.5% per annum. The company pays biannual dividend after Q2 and Q4. Assumer interest rate is constant. In 2025, each dividend is $2.75.

i) Calculate the forward price of a forward contract with one year maturity.

ii) What is the value of this contract after six months is the price of the company has decreased to $37? What would be the expected price after 6 months when initiated at t=0?

iii) Explain if and why your calculated value in ii) is different from 0. Is the buyer or seller in a favourable position?