An investor took a long position in a forward contract on a stock 100 days ago. At the time of the contract initiation:

• The stock was selling at $100.
• The stock would pay a dividend of $1.50 in 60 days, $1.50 in 120 days, and another $1.50 in 180 days.
• The no-arbitrage forward price was $98.98.
• The contract would expire in 250 days.

Suppose the risk-free rate is 5.25%. The stock price now is $110. What's the value of the forward contract at this point?

Explanation: At this time, two dividends remain: the first one in 20 days, and the second one in 80 days.

PV(D, t, T) = 1.5/1.0525^20/365 + 1.5/1.0525^80/365 = $2.98

Vt(0, T) = 110 - 2.98 - 98.98/1.0525^150/365 = $10.1

A positive value is a gain to the long position.