An Expiration Date Payoff and Profit Diagram for Forward Positions

question 35

Multiple Choice

An expiration date payoff and profit diagram for forward positions illustrates

• A) gains and losses are usually small.
• B) the payoffs to both long and short positions in the forward contract are asymmetrical around the contract price.
• C) forward contracts are zero-sum games.
• D) long positions benefit from falling prices.
• E) short positions benefit from rising prices.

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