CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

Subsequent to the initiation date, ______

A. the value of the forward contract can fluctuate.
B. the price of the forward contract can fluctuate.
C. both the value and the price of the forward contract can fluctuate.
Correct Answer: A

The value can become significantly positive or negative, but the forward price will remain the same.

User Contributed Comments 5

User Comment
aparmar explain?
sahilb7 The price of a forward contract is always fixed (i.e. forward price).
However, once the contract starts the spot price may vary on the basis of various factors. This may lead to a change in the value of the contract.
alex2001 Thanks Sahilb7, very helping.
khalifa92 value is the gain and losses
khalifa92 S0 is price time 0 - PV discounted cash flows = Value
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