Question: Consider a forward contract on a commodity with expiry T and strike K (a) What is the price of the contract? (b) Draw the payoff

Consider a forward contract on a commodity with expiry T and strike K

(a) What is the price of the contract? (b) Draw the payoff at T, labeling axis and important points.

(c) I want to long a forward, what premium must I pay? (d) Justify the answer in part (c)

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