Question
A short forward contract that was negotiated some time ago will expire in four months and has a delivery price of $40. The current forward
A short forward contract that was negotiated some time ago will expire in four months and has a delivery price of $40. The current forward price for the four-month forward contract is $42. The four-month risk-free interest rate (with continuous compounding) is 6% per annum. What is the value of the short outstanding forward contract?
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Introduction to Finance Markets Investments and Financial Management
Authors: Melicher Ronald, Norton Edgar
15th edition
9781118800720, 1118492676, 1118800729, 978-1118492673
