A 2-year futures contract on a stock paying a continuous dividend yield of 3% pa was bought when the underlying stock price was $10 and the risk free rate was 10% per annum with continuous compounding. Assume that investors are risk-neutral, so the stock's total required return is the risk free rate.
Find the forward price (F2) and value of the contract (V0) initially. Also find the value of the contract in 6 months (V0.5) if the stock price rose to $12.