Assume That the Price Paid by the Buyer of a Forward

question 28

Multiple Choice

Assume that the price paid by the buyer of a forward is $82 000 and further assume that the spot price of purchasing the hedged underlying asset at delivery date is $85 000.What is the result for the forward seller?

• A)The result is a $3000 profit.
• B)The result is a $3000 loss.
• C)The answer depends on how the forward price develops over time.
• D)There is too little information to answer the question.

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