Question: Question 1. Bill and Jim enter into a binding contract involving the exchange of an asset in nine months time. The current market price of

Question 1. Bill and Jim enter into a binding contract involving

Question 1. Bill and Jim enter into a binding contract involving the exchange of an asset in nine months time. The current market price of the asset is $100. The continuously compounded interest rate is r = 0.045. The contract calls for Jim to sell the asset to Bill at that time at a price G that is set today. The price G is set so that a fair valuation of the contract requires Jim to pay Bill $2.20 today. If the price of the asset in nine months time is $98 what is Jim's total profit or loss at the time the asset is sold

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