Did anyone find a problem with question 19 on the 2nd sample test? It seems like the answer, $3.84 for the value of the short position, is discounted incorrectly and the answer should be close to the undiscounted $5.00 (value of the strike minus underlying stock value). It is only being discounted at 6% annually for 90 days, correct?
this one made me look twice too… Value = spot - FP/(1+r)^t spot was 75, fp was 80… so 80/(1.06)^.25 = 78.843 75-78.843 = -3.84
Thanks…just had another formula wrong
yeah, the derivatives stuff is tricky… that is the forumla for most value formulas tho… they all have a little twist, but most are spot-forward/discount value, so start there is you get stuck on any of them, then dig your way out from there.