📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

  • google app store apple app store
  • ✖

      Question

      Animesh enters into a short position in a forward

      contract where the forward price is Rs.25 and spot price at maturity is Rs.30. What will be Animesh’s payoff?
      A Gain of 5 Correct Answer Incorrect Answer
      B Loss of 5 Correct Answer Incorrect Answer
      C Gain of 10 Correct Answer Incorrect Answer
      D Loss of 10 Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      For a short position, the person has agreed to sell the underlying asset at Rs.25. As such, if the spot price increases at maturity, there is a loss. Therefore, loss for the spot position is 25 – 30 = -5

      Practice Next

      Relevant for Exams:

      ask-question