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Statistics and Financial Mathematics Question : Financial Mathematics (a) The price of a forward contract on a share is given by F = Soem where S, is the current share price, r is the risk-free rate of interest, and T is the length of the contract A one-year forward contract on a non-dividend paying share is entered into when the share price is £40 and r = 10%. ( What is the forward price and the initial value of the forward contract? 12] (1) Six months later, the price of the share is £45 and the risk free rate is still r = 10%. What are the forward price and the value of the forward contract? [2] An asset currently has a price of £10. Suppose that six-months future prices of: (b) (0) () £11 £10.10 are available. If the risk free rate is r = 6%, show that a risk-free profit can be made in both cases. [6]