Question: Consider a 2-year forward contract on a security. The forward contract delivers one unit of the security. The term structure is flat at 8%, and

Consider a 2-year forward contract on a security. The forward contract

Consider a 2-year forward contract on a security. The forward contract delivers one unit of the security. The term structure is flat at 8%, and rates are quoted with annual compounding. The current spot price of the security is $32. Suppose that the contract sets a forward price of $36. What is the most you should be willing to pay today to enter into this contract

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