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What is the fair value of this contract

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Reference no: EM133177554

Question - Gold currently sells at $1000 per troy ounces. An off market forward contract, signed several months ago expires 1 year with a forward price of $1095. This annual risk free rate is 2.5%.

What is the fair value of this contract. If the contract is traded at it's fair value, indicate the payment is made by the long to the short or vice-versa?

Reference no: EM133177554

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