List three of the main features of a forward contract:

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jeff jeffy answered 1 year ago

Critically discuss the main features of Eurocredits and Forward Rate Agreements

Forward Contract

A long forward contract that was negotiated some time ago will expire in three months and has a delivery price of $20. The current forward price for a three-month forward contract is $21. The three-month risk-free interest rate is 8%. What to the nearest cent is the value of the short forward contract? A) -$1.85 B) $2.00 C) -$0.98 D) $0.98

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Differentiate between a spot contract and a forward contract.

A forward contract on a non-dividend paying stock trades at 1,200. This forward contract matures 1...

A forward contract on a non-dividend paying stock trades at 1,200. This forward contract matures 1 month from now. A second forward contract on the same stock trades at 1,220 and expires 3 months from now. Suppose perfect market and a continuously compounding interest rate which will remain same over the next 6 months. 1. What is the spot price of the underlying asset today? 2. Now, suppose there is a third forward contract, expiring in 4 months and trading...

Explain the difference between a forward contract and a futures contract.

1. Compare and contrast options and forward contract. 2. What factors distinguish a forward contract from...

1. Compare and contrast options and forward contract. 2. What factors distinguish a forward contract from a future contract? What do forward and futures contracts have in common? What advantages does each have over the other?

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How would you use a forward contract, futures contract, and a call option contract on the...

How would you use a forward contract, futures contract, and a call option contract on the US $ / Australian $ FX rate to hedge the FX risk of paying a $A1 million bill in Australian Dollars for a purchase to be delivered and paid in 90 days? What are the pro and cons of using each FX derivative in general?

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