CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

Today you entered a short six-month forward contract to sell a stock at a price of $32 six months from now. The stock is priced at $30 today. The risk-free interest rate is 3%, compounded annually. The value of your forward contract today is ______.

A. zero
B. $0.5
C. $2
Correct Answer: A

At initiation date the value of a forward contract is zero. The price of the forward contract is $32.

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