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Assume that you own a security currently worth $250. To hedge against a possible decline in price, you enter into a forward contract to sell
Assume that you own a security currently worth $250. To hedge against a possible decline in price, you enter into a forward contract to sell the security in three months. The risk-free rate is 3.0 percent. You contract at the No Arbitrage forward price at t=0 and then two months hence spot is $243, what is your gain or loss on the forward?
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