Homework Answers
As it is a short position, it will have :
- a positive payoff if the price in 6 months is lower than the forward price,
- a negative payoff if the price in 6 months is higher than the forward price
- zero payoff if the price in 6 months is equal to the forward price
When price is $33, payoff = $45 - $33 = $12
When price is $39, payoff = $45 - $39 = $6
When price is $45, payoff = $45 - $45 = $0
When price is $49, payoff = $45 - $49 = -$4
When price is $53, payoff = $45 - $53 = -$8
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