Question $2$

a$.$ How derivative contract can be used for hedging purpose? Briefly explain with an example.

$(3$ Marks$)$

b$.$ Differentiate forward contract and swap contract.

$(3$Marks$)$

c$.$ Two parties enter into a forward contract for $100$ tons wheat at a delivery price of BDT $40,000$ per ton, with a delivery date of $5$ months from now. If the market price of wheat falls to BDT $37000$ per ton, during the delivery date. Calculate the value of the forward contract for the long position.

$(2$ Marks$)$