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A share of Disney stock is currently worth $105.33. An investor enters a short position on a 6-month forward contract on the DIS stock with
A share of Disney stock is currently worth $105.33. An investor enters a short position on a 6-month forward contract on the DIS stock with a dealer. The risk-free rate is 4% APR semi-annual compounding. (Assume discrete compounding.) Two months later, the price of the stock declines to $103.85. Answer the fol- lowing questions: (a) Who bears the credit risk? (b) Is this current credit risk or potential credit risk? (c) What is the amount of credit risk
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