The Payoffs to Both Long and Short Position in the Forward

question 5

True/False

The payoffs to both long and short position in the forward contact are symmetric around the contract price.

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Definitions:

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved or is unachievable.

Elastic

Describes a situation in which the demand or supply for a good or service significantly changes in response to a change in price.

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium outcome is not achieved due to market distortion, such as taxes or subsidies, leading to a reduction in total welfare.

Vacationing Abroad

The act of traveling to another country for leisure, exploration, or relaxation purposes.