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4. Consider a one-year forward contract established at rate of $65. The contract is three months into its life. The spot price is $70, the
4. Consider a one-year forward contract established at rate of $65. The contract is three months into its life. The spot price is $70, the risk-free rate is 3 percent, and the underlying makes no cash payments. At month 3, determine: a) the amount at risk of a credit loss; b) which party bears credit risk, long or short?
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