An investor enters into a forward contract to purchase 100,000 shares of IBM stock in 2 months at prices of $105 per share. After one month, the investor notes that the forward price for the same contract (which now has a one-month maturity) is $103 per share. She also notes that the one-month discount factor is 0.993. The value of the forward contract held by the investor is
A) $+ \$ 198,600.00$
B) $- \$ 198,600.00$
C) $+ \$ 200,000.00$
D) $+ \$ 201,409.90$

Question

An investor enters into a forward contract to purchase 100,000 shares of IBM stock in 2 months at prices of $105 per share. After one month, the investor notes that the forward price for the same contract (which now has a one-month maturity) is $103 per share. She also notes that the one-month discount factor is 0.993. The value of the forward contract held by the investor is 
A) $+ \$ 198,600.00$
B) $- \$ 198,600.00$
C) $+ \$ 200,000.00$
D) $+ \$ 201,409.90$

Quizplus · Accepted Answer

The Answer of An investor enters into a forward contract to purchase 100,000 shares of IBM stock in 2 months at prices of $105 per share. After one month, the investor notes that the forward price for the same contract (which now has a one-month maturity) is $103 per share. She also notes that the one-month discount factor is 0.993. The value of the forward contract held by the investor is 
A) $+ \$ 198,600.00$
B) $- \$ 198,600.00$
C) $+ \$ 200,000.00$
D) $+ \$ 201,409.90$

An Investor Enters into a Forward Contract to Purchase 100,000 +$198,600.00+ \$ 198,600.00+$198,600.00

An Investor Enters into a Forward Contract to Purchase 100,000 $+ \$ 198,600.00$