Question
Suppose forward price for a contract maturing on December 15, 20XX is $100/share. a. How much would the short position trader earn or lose if
Suppose forward price for a contract maturing on December 15, 20XX is $100/share.
a. How much would the short position trader earn or lose if the spot price at maturity was $117/share? How much would the short position trader earn or lose if the spot price at maturity was $95/share?
b. Draw the payoff profile of a short forward contract.
c. How much would the long-position trader earn or lose if the spot price at maturity was $117/share? How much would the long-position trader earn or lose if the spot price at maturity was $95/share?
d. Draw the payoff profile of a long forward contract.
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