This is from CFA reading 58, EOC Q1. The sol to part B says that since the value is -ve, payment is made by the short to the long? isnt it the other way?since if the value is -ve (for long) and +ve for short so long should be paying the short?
settled OFF market…
Value at initiation should be zero, or arbitrage free. Since the long position has a loss at initiation, the short has to be the amount in order to bring the contract back to zero. Otherwise, why would one enter a forward contract when you already have a loss at the onset?