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)The result is a $3000 profit.
B)The result is a $3000 loss.
C)The answer depends on how the forward price develops over time.
D)There is too little information to answer the question.

Question

Quizplus · Accepted Answer

The forward seller profits by the difference between the spot price and the forward price, which is $85,000 - $82,000 = $3,000.

Assume That the Price Paid by the Buyer of a Forward