An asset whose spot price is K$100$ is put into consideration. There are plans by investor to sell it in one year and the investor is worried that the price may have fallen at the point of time. To hedge that risk, a forward contract is entered into by the investor to sell the asset in a years$$

time. Assume that the risk$-$free rate is $10\%.$

a$.$ What is the appropriate price at which this investor can enter into the contract to sell

the asset in one years$$ time?

b$.$ After three months into the contract, the price of the asset is K$90.$ What is the gain or

loss realized in the forward contract?

c$.$ An assumption is made that five months into the contract, the spot price of the asset is

K$107.$ What is the gain or loss on the forward contract?

d$.$ Given that at expiration, the price of the asset is K$98.$ What is the value of the forward

contract at expiration? Also indicate the overall gain or loss to the investor on the whole

transaction. Is this amount more or less than the overall gain or loss from Part C$.?$

e$.$ If the main difference between a forward and future contract is that future is

standardized and market traded, how are future contract superior to forwards?