(3 points) A one-year long forward contract on Amazon is entered into when its stock price is $1,900 and the continuous compounded interest rate is 2.5%. Amazon pays no dividends. a) What are the fair forward price and the initial value of the forward contract? b) Six months later, the stock price of Amazon rises to $2,000. What are the current fair forward price and the current value of the long forward contract? c) If the forward price is set at $1,950 at the beginning, how would you arbitrage it? (Hint: If the forward price is too high, short the forward. Otherwise, long it. Do the opposite for Amazon shares and decide borrowing/lending. See the gold arbitrage tables in lecture slides.) (3 points) A one-year long forward contract on Amazon is entered into when its stock price is $1,900 and the continuous compounded interest rate is 2.5%. Amazon pays no dividends. a) What are the fair forward price and the initial value of the forward contract? b) Six months later, the stock price of Amazon rises to $2,000. What are the current fair forward price and the current value of the long forward contract? c) If the forward price is set at $1,950 at the beginning, how would you arbitrage it? (Hint: If the forward price is too high, short the forward. Otherwise, long it. Do the opposite for Amazon shares and decide borrowing/lending. See the gold arbitrage tables in lecture slides.)