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      Question

      Compute the payoff to a long position in a forward

      contract given that the forward price is Rs 35 and the price at maturity is Rs 55.
      A Loss of 20 Correct Answer Incorrect Answer
      B Gain of 20 Correct Answer Incorrect Answer
      C Loss of 55 Correct Answer Incorrect Answer
      D Gain of 35 Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      A long position is benefitted when the price at maturity increases. So positive payoff, in this case, would be: 55 – 30 = 20

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