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3.2. Today is 17 September 2013. Consider a forward contract (which started on some earlier date) on a risky security with forward price 105.65 and
3.2. Today is 17 September 2013. Consider a forward contract (which started on some earlier date) on a risky security with forward price 105.65 and delivery date 1 April 2014. Today's price of the risky security is 98.40, and the annually compounded risk-free interest rate is 4.36%, assumed constant. How much money would the holder of a long position in the forward contract have to pay (or receive) to close the position today (that is, on 17 September 2013)? How much money would the holder of a short position in the forward contract have to pay (or receive) to close the position today (that is, on 17 September 2013)? (20 marks)
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