If the total costs of holding an asset exceed the total benefits, then what value the forward contract of that asset will have at the initiation for the long party?

A. Positive value
B. Negative value
C. Zero value

Correct Answer: C

A forward contract will have a zero value at the initiation regardless whether the costs are higher or benefits are higher. The costs and benefits impact the pricing of the contract but not the value of the contract at the initiation.