(4) At time 0 you short a forward contract to buy a stock for price K...

  

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(4) At time 0 you short a forward contract to buy a stock for price K at a future time T. Prove that at a later time t>0 your P&L is P&L(t) = P(t,T)[K-E], where F is the forward price of the stock at t. (4) At time 0 you short a forward contract to buy a stock for price K at a future time T. Prove that at a later time t>0 your P&L is P&L(t) = P(t,T)[K-E], where F is the forward price of the stock at t.

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At time 0 the investor shorts a forward contract to buy a stock for a price K at a future time T The ... View the full answer