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Calculate the value of the forward contract to the company

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Reference no: EM132920578

Problem 1: A company has entered a short position in a forward contract to lock in a price of $87 for one year. In 9-month time, the market price of the underlying asset has risen to $149 and the interest rate is 5% per annum with continuous compounding. Calculate the value of the forward contract to the company in 9-month time?

a. $ 65.20

b. $ -56.52

c. None of the other answers provided is the best answer

d. $ 56.52

e. $ -65.20

Reference no: EM132920578

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