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Problem #4: (a) Suppose you enter into a short 3-month forward position at a forward price of $80. What is the payoff at [3 marks
Problem #4: (a) Suppose you enter into a short 3-month forward position at a forward price of $80. What is the payoff at [3 marks expiration for a price of $55? (b) Suppose you buy a 3-month put option with a strike price of $50. What is the payoff at expiration for a price of $55? (c) Comparing the payoffs of parts (1) and (2), which contract should be more expensive? (A) The long put (B) The short forward Problem #4(a): answer correct to 2 decimals Problem #4(6): answer correct to 2 decimals Problem #4(c). Select
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