Which of the following statements is/are true? (Be careful about the signs) i. A 9-month forward contract
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Question:
Which of the following statements is/are true? (Be careful about the signs)
i. A 9-month forward contract was initiated 1 months ago (has 8 months remaining to maturity). The delivery price is $290 and the forward price now is $265. If the interest rate is 10% per annum continuously compounded, the value of the contract to a person holding a long position is -$20.529.
ii. A 1-year forward contract was initiated 3 months ago (has 9 months remaining to maturity). The delivery price is $80, and the forward price now of this contract is $85. If the interest rate is 10% per annum continuously compounded, the value of the contract to a person holding a short position is $4.116.
Select one:
a.i only
b.ii only
c.Both i and ii
d.Neither i nor ii
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