Consider an asset currently worth $100. An investor plans to sell it in one year and is concerned that the price may have fallen significantly by then. To hedge this risk, the investor enters into a forward contract to sell the asset in one year. Assume that the risk-free rate is 5 percent.

Assume that five months into the contract, the price of the asset is $107. Calculate the gain or loss on the forward contract.

Suppose that at expiration, the price of the asset is $98. Calculate the value of the forward contract at expiration. Also indicate the overall gain or loss to the investor on the whole transaction.

Now calculate the value of the forward contract at expiration assuming that at expiration, the price of the asset is $110. 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 the previous part?