Assume that the price paid by the buyer of a forward is $82 000 and further assume that the spot price of purchasing the hedged underlying asset at delivery date is $85 000. What is the result for the forward seller?
A) A $3000 profit.
B) A $3000 loss.
C) The answer depends on how the forward price develops over time.
D) Too little information to answer the question.

Question

Quizplus · Accepted Answer

The forward seller profits by selling the asset at the agreed forward price of $82,000, which is lower than the spot price of $85,000, resulting in a $3,000 profit.

Assume That the Price Paid by the Buyer of a Forward