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  3. 4. 5 pts) suppose we made a forward contract with

4. 5 pts) Suppose we made a forward contract with delivery price K on a...

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4. 5 pts) Suppose we made a forward contract with delivery price K on a stock whose current price is $100. The maturity date is one year from now, and the compounding factor for a year is 1.1. (4 pts) Construct a replicating portfolio of the stock and a risk-free asset for the long position of this forward contract. In other words, identify 1) the number of shares of the stock and 2) the amount of money to be invested in the risky-free asset so that the pay-off o this portfolio is identical to that of the forward contract. (a) (b) 1 pts) What is the fair delivery price K

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