Suppose You Buy a One-Year Forward Contract at $65

question 59

Multiple Choice

Suppose you buy a one-year forward contract at $65.At expiration,the spot price is $73.The risk-free rate is 10 percent.What is the value of the contract at expiration?

• A)$8.00
• B)-$8.00
• C)$0.00
• D)$7.27
• E)none of the above

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Definitions:

Orienting Reflex

The instinctual reaction of an organism to a novel stimulus, often involving attention redirection towards the source of the stimulus.

Stimulus

Any event or situation that evokes a response or reaction from an organism or system.

Intrinsic Motivation

The drive to engage in an activity for its own sake, because it is interesting and satisfying in itself, not for some separate outcome.

Creativity at Work

The ability to generate innovative and useful ideas and solutions within a professional context.