France's thomson electronics combined with china's tcl to form tcl-thomson electronics. thomson owns 33% and tcl owns the remain
1 answer:
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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