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Question 5 This question asks you to think about how the value of a forward contract changes over time. (i) [In February 20 you enter

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Question 5 This question asks you to think about how the value of a forward contract changes over time. (i) [In February 20 you enter into forward contract to buy ABC shares on December 20. ABC shares currently trade at $1013. 1What is the forward price? (The continuously compounded interest rate is 10% and assumed to be constant for the whole calendar year.) (ii) On May 20, the price of one ABC share is $15G. What is the forward price of a forward contract with delivery date December 20 (dtis is a different contract]? (iii) Forward contracts are not traded on an exchange, they do not have a market price. However, a reasonable way to define the value of a forward contract is as the amount of money someone would have to pay you today to give up your forward contract. Using this definition, what is the value of the original forward contract (that you entered into in February] on May 20

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