Question: 1. A long forward contract (you bought forward) that was negotiated some time ago will expire in three months and has a delivery price of

1. A long forward contract (you bought forward) that was negotiated some time ago will expire in three months and has a delivery price of $50. The current forward price for a three-month forward contract is $40. The three month risk-free interest rate (with continuous compounding) is 5%. What is the value of the long forward contract?

2.A trader enters into a short position in ten Eurodollar futures contract (sell 10 contracts). How much does the trader gain (or lose) when the futures price quote increases by 15 basis points?

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