Question: ( 4 ) Consider a 9 - month forward contract established at rate of $ 2 8 . The contract is 3 months into its

(4) Consider a 9-month forward contract established at rate of $28. The contract is 3
months into its life. The spot price is $30, the annual risk-free rate is 4 percent,
and the underlying makes no cash payments At month 3, determine:
a) the amount at risk of a credit loss;
b) which party bears credit risk, long or short?
(4) Consider a 9-month forward contract established at rate of $28.

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