Answer:
<u>Future Price</u>
F0: 126.89
F3: 113.13
F4: 113.41
<u>Value of the contract:</u>
a) zero (by definition)
b) -13
c) -13
Explanation:
<em>forward price:</em>

being S the spot rate
time 9 months and
rate 2% <u>continuous componding</u>
As the rate is continuous we calculate using the e number instead:


F = 125 x 1.015113065
F = 126.8891331 = 126.89
<u>3th month into the contract:</u>

F = 113.1256187 = 113.13
<u>4th month</u>

F = 113.4087866 = 113.41
<u>value of the contract</u>
at third month:
Vt = St - F0
Vt = 112 - 125 = -13
at fourth month
Vt = 112 - 125 = -13
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Answer: E. Learning Curve
Explanation: The learning curve is usually adopted in evaluating the association between cost and output over a certain period of time. The learning curve shows how usually indicates the changes in cost and output associated with a task as employees or workers start to engage in a certain task or function. Generally, initial task performance by an employee usually result in higher cost output with gradual reduction in cost becoming visible as the Repetition of such task is being embarked upon by the employee.