Question: Consider a 2 - year forward contract on a non - dividend - paying stock. The stock is currently 1 2 0 / The riskfree

Consider a 2-year forward contract on a non-dividend-paying stock. The stock is currently 120/ The riskfree rate is 5% for all maturities.
a. What is the forward price?
b. What is the value of the contract that has just been created?
c. Why is the forward price obtained in a. correct? Give arguments as to why it could not be
any other price.
d. If you take a long position on a forward contract on 50 stocks. What would be your payoff in
two years if, at that time, the spot price is 60

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