can anyone solve please ?
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Value of forward contract = F0=S0(1+r)^T−(benefit-cost)(1+r)^T
S0=89.1 we will compound this 14 months ahead i.e. 92.269
Benefit-cost=-3.2 we will compound this 14 months head i.e. -3.313
so F0=92.269-(-3.3138)=95.58
I am not getting the exact answer. Further discussion is appreciated
i hope this helps
Is it not asking value of forward contract today which was purchased 2 months back and we have to find the value of this forward contract here.
why did you use 14 months?
I interpreted it as the price of the forward contract at initiation, i might be wrong
Please share its solution.
yes sure !
here is the explanation given !