Suppose You Bought a Forward on January 1 That Matures

question 12

Multiple Choice

Suppose you bought a forward on January 1 that matures a year later.The forward price was $214 at that time and the simple interest rate was 7 percent per year.Six months have passed,and the spot price is now $190.The value of your forward contract today is:

• A) -$16.76
• B) -$3.56
• C) 0
• D) $16.76
• E) None of these answers are correct.

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