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Suppose you are expecting your fourth child in six months and you need a bigger car. You have your eye on a used three -
Suppose you are expecting your fourth child in six months and you need a bigger car.
You have your eye on a used threeyearold minivan that currently costs approximately
$ You are concerned about the pricing and availability of this specific car in six
months' time, but you won't have enough money to purchase the car until six months
from today.
a How could you advertise in the newspaper for a forward contract with
a counterparty that would eliminate your risk?
b Who would be willing to take the short position on your forward contract? Who
is the likely counterparty?
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