Question: 33. What is the difference between the forward price and the value of a forward contract? The value of a forward contract is the dollar

33. What is the difference between the forward price and the value of a forward contract? The value of a forward contract is the dollar amount per unit at which the parties agree to buy/sell an asset in the future. The price of the contract is essentially how much it would cost to cancel the agreement. It is zero when the terms are agreed upon, and results from subsequent market changes that make the agreed upon value more attractive to one of the parties. The price of a forward contract is the dollar amount per unit at which the parties agree to buy/sell an asset in the future. The value of the contract is essentially how much it would cost to cancel the agreement. It is zero when the terms are agreed upon, and results from subsequent market changes that make the agreed upon price more attractive to one of the parties

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

33. What is the difference between the forward price and the value of a forward contract? * [t] (5 Points) The value of a forward contract is the dollar amount per unit at which the parties agree to...

What is the difference between the forward price and the value of a forward contract? a. The value of a forward contract is the dollar amount per unit at which the parties agree to buy/sell an asset...

(a) Suppose that the risk-free interest rate is 10% per annum with continuous compounding and that the dividend yield on a stock index is 4% per annum. The index is standing at 400, and the futures...

5.11. What is the difference between the forward price and the value of a forward contract?\ 5.12. Suppose that you enter into a 6-month forward contract on a non-dividend-paying stock when the stock...

Financial Mathematics QUESTION 3 (a) What is the difference between the forward price and the value of a forward contract? [2] (b) A one-year long forward contract on a non-dividend-paying stock is...

please do C,d,e in 15 minutes will upvote 7. Consider A stock is expected to pay a dividend of $1 per share in two months and in five months. The stock price is $50, and the risk-free rate of...

Under what circumstances are (a) a short hedge and (b) a long hedge appropriate? (5 marks) Explain what is meant by a perfect hedge. Does a perfect hedge always lead to a better outcome than an...

Problem 5 . 1 . Explain what happens when an investor shorts a certain share. Problem 5 . 2 . What is the difference between the forward price and the value of a forward contract? Problem 5 . 3 ....

Suppose Joe has just entered into a long position of 6-month forward contract on a dividendpaying stock when the stock price is $55. The stock is expected to pay dividends of $0.5 per share in 1...

Question 1 (20 marks) Suppose Joe has just entered into a long position of 6-month forward contract on a dividend- paying stock when the stock price is $55. The stock is expected to pay dividends of...

A consumer group tested two brands of inkjet printer cartridges for a particular printer to see whether there was a difference in the number of pages produced before the cartridge ran out of ink. The...

A particle of mass m = 1 kg is subjected to a one dimensional force F(t) kteat, where k = 1 N/s and a = 0.5 s1. If the particle is initially at rest, calculate and plot with the aid of a computer...

What is the annual percentage rate ( APR ) if a bank pays 1 . 0 5 % interest monthly on savings? 8 . 4 % . 1 2 . 6 % . 1 6 . 8 % . 6 . 3 %

SIMAD UNIVERSITY Class: BACC25 Subject: Islamic Accounting Instructions: a) Follow The Instructions. Midterm Exam Instructor: All Ibrahim Date: 6-4-2022 b) You Have 1.5 Hrs. To Complete This Test. c)...

5. Understand how cultural values influence conflict behavior.

6. Describe how communication can reinforce cultural beliefs and behavior.

3. Analyzing a Film. View a feature film or a video (e.g., Chir-raq or Brooklyn) and assume the position of a researcher. Analyze the cultural meanings in the film from each of the three...