A one-year forward contract with an underlying asset price of $200. The risk-free rate is 5.5%. The forward contract, which was originally priced at $200, has 6 months remaining and the underlying asset is now worth $205. Forward price = 200 x 1.055 = 211. The long forward contract’s value is $205 - $211 / (1.055)0.5 or -$0.4264. but forward price is not fixed at 200 as originally made?
Soexcel, that sort of question killed lots of people: http://www.analystforum.com/phorums/read.php?13,711360,page=1 I also didn’t get it. I would say because we already have original price of F we don’t need calculation of FP anymore… 205-200/1.0555^0.5 the only explanation I found in CR is on p.47Read.37 but it’s seems we can’t trust it because of errata… ??? P.S. by the way it’s sapmle #3, not 2