Jane is a portfolio manager for ABC Capital. She forecasts that the common stock of XYZ Corp, which ABC holds, and which is now priced at $50, will most probably fall in the near future and plans to sell it in 180 days. Two dividend payments of $1.75/share each are expected on XYZ stock, one in 60 days and one in 150 days. The risk free rate is 4% on a continuous compounding basis. Use the above information to answer this and the next four questions. 1) Jane could hedge against a possible price decline in XYZ's stock price in 180 days by: a. Selling a forward contract on ABC stock with 180 days to the delivery date b. Selling a forward contract on XYZ stock with 180 days to the delivery date c. Buying a forward contract on XYZ stock with 180 days to the delivery date 2) The forward price of a contract on XYZ stock which is established today and expires in 180 days is closest to: a. 47.47 b. 48.47 C. 46.47 3) Suppose that the forward price of a forward contract on XYZ stock with 180 days to the delivery date is $52. On the delivery date, if the stock price is 55.00, the value of a short forward position is closest to: a. +$3.00 b. -$3.00 C. -$2.00 4) Suppose that Jane initiated a short position in a forward contract on XYZ common stock with a delivery date in 180 days and a forward price of $50. When 90 days have passed, the stock price is $55. The risk-free interest rate is still 4%. Use this information to answer this and the next question. The forward price of a forward contract on XYZ common stock with a delivery in 90 days is closest to: a. $55.55 b. $52.02 C. $53.79 5) The value of Jane's short position in the forward contract is closest to: a. -$5.49 b. +$3.75 C. -$3.75