Which is a graph of a short position in a forward contract?

A) I
B) II
C) III
D) IV

Question

Which is a graph of a short position in a forward contract?

A) I 
B) II 
C) III 
D) IV

Quizplus · Accepted Answer

In a short position in a forward contract, the investor agrees to sell an underlying asset at a future date at a price agreed upon today. As the price of the underlying asset decreases, the profit for the short position increases. Therefore, the graph should have a negative slope, as shown in graph III. Graphs I, II, and IV have positive slopes, which represent long positions in a forward contract.

Which Is a Graph of a Short Position in a Forward