The Value of a Long Position in a Forward Contract

question 5

Multiple Choice

The value of a long position in a forward contract at expiration is

• A)the spot price plus the original forward price
• B)the spot price minus the original forward price
• C)the original forward price discounted to expiration
• D)the spot price minus the original forward price discounted to expiration
• E)none of the above

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Definitions:

Carrier Pigeons

Birds historically used to transport messages across long distances before the advent of electronic communication.

Probability Of Arriving

Refers to the chance or likelihood that something will reach a particular destination within a given period.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values.

MTBF

Mean Time Between Failures, a reliability metric that measures the average time between system failures in a process or product.