Multiple Choice
A short forward contract that was negotiated some time ago will expire in three months and has a delivery price of $40.The current forward price for three-month forward contract is $42.The three month risk-free interest rate (with continuous compounding) is 8%.What is the value of the short forward contract?
A) +$2.00
B) −$2.00
C) +$1.96
D) −$1.96
Correct Answer:
Verified
Correct Answer:
Verified
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