Answer:
present value = $1.9539
forward price f1 = $50
present value = $0.9867
forward price f2 = $47.96
value of short position = $2
Explanation:
given data
pay a dividend = $1 per share
time = 2 months
time = 5 months
stock price = $50
rate of interest = 8%
solution
we get here present value that is
present value = principal ×
so
present value = $1 ×
+ $1
present value = $1.9539
and
forward price will be
forward price = ( stock price - present value ) ×
forward price = ( 50 - 1.9539 ) ×
forward price f1 = $50
and
now we get present value of future dividend that is
present value = $1 ×
present value = $0.9867
and
forward price is now as
forward price = ( $48 - 0.9867 ) ×
forward price f2 = $47.96
and
value of short position is = ( f1 - f2) ×
value of short position = ( 50 - 47.96 ) × 
value of short position = $2