Suppose You Sell a Three-Month Forward Contract at $35

question 44

Multiple Choice

Suppose you sell a three-month forward contract at $35.One month later,new forward contracts with similar terms are trading for $30.The continuously compounded risk-free rate is 10 percent.What is the value of your forward contract?

• A)$4.96
• B)$5.00
• C)$4.92
• D)$4.55
• E)none of the above

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