Aaron has purchased a forward contract on a stock. You are given: (i) If the stock price
Question:
Aaron has purchased a forward contract on a stock. You are given:
(i) If the stock price at expiration is S, his payo would be –$5.
(ii) If the stock price at expiration is 1.1S, his payoff would be $1.
Calculate Aaron's profit on the long forward if the stock price at expiration is 1.2S.
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Step by Step Answer:
Solving the two payoff equations we get S ...View the full answer
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