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Basic Question 2 of 2
Subsequent to the initiation date, ______
B. the price of the forward contract can fluctuate.
C. both the value and the price of the forward contract can fluctuate.
A. the value of the forward contract can fluctuate.
B. the price of the forward contract can fluctuate.
C. both the value and the price of the forward contract can fluctuate.
User Contributed Comments 5
| User | Comment |
|---|---|
| aparmar | explain? |
| sahilb7 | The price of a forward contract is always fixed (i.e. forward price). However, once the contract starts the spot price may vary on the basis of various factors. This may lead to a change in the value of the contract. |
| alex2001 | Thanks Sahilb7, very helping. |
| khalifa92 | value is the gain and losses |
| khalifa92 | S0 is price time 0 - PV discounted cash flows = Value |
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Colin Sampaleanu
Learning Outcome Statements
explain how the value and price of a forward contract are determined at initiation, during the life of the contract, and at expiration
CFA® 2024 Level I Curriculum, Volume 5, Module 5.