Question

when one agrees on a forward contract, the buyer pays the forward price to the seller...

when one agrees on a forward contract, the buyer pays the forward price to the seller today

0 0
Add a comment Improve this question Transcribed image text
Answer #1

HI,

Forward price is the predetermined price that buyer and seller agrees for a forward contract and that to be paid at some day in future.

Hence above statement is wrong that buyer pays the forward price to seller today.

Thanks

Add a comment
Know the answer?
Add Answer to:
when one agrees on a forward contract, the buyer pays the forward price to the seller...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • The value of a forward contract is always equal to $0. True False When one agrees...

    The value of a forward contract is always equal to $0. True False When one agrees on a forward contract, the buyer pays the forward price to the seller today. True False When 3-month LIBOR is expected to rise, Eurodollar futures price will decrease. True False To protect against future short-term interest rate decrease, a bank should long Eurodollar futures today. True False

  • in which one of the following types of contract between a seller and a buyer does...

    in which one of the following types of contract between a seller and a buyer does the seller agree to sell a specified asset to the buyer today and then buy it back at a specified time in the future at an agreed future price. a) repurchase agreement . C) swap d) call e) none of the above Organized options markets are different from over- the counter options markets for all of the following reasons except a) legal contracts c)...

  • A one-year forward contract of a share, which pays no dividend before the contract matures is...

    A one-year forward contract of a share, which pays no dividend before the contract matures is written when the share has a price of $50 and the risk-free interest rate is 10% a year. A. What is the forward price? B. If the share is worth $55 six months later, what is the value of the original forward contract at this time? If another forward contract is to be written with the same date of maturity, what should the forward...

  • A buyer agrees to purchase a house for $184,500. The buyer pays $2,000 EMD and obtains...

    A buyer agrees to purchase a house for $184,500. The buyer pays $2,000 EMD and obtains a new mortgage loan for $167,600. The purchase contract provides for a March 15 settlement. The buyer and the sellers prorate the current year's real estate taxes of $1880.96, which have been prepaid. The buyer has additional closing costs of $1,250, and the sellers have other closing costs of $850. How much cash must the buyer bring to the settlement? a. $16,389.09 b. $17,639.10...

  • 31. Seller delivers goods to Buyer who agrees to pay the S5.000. Price in 60 days....

    31. Seller delivers goods to Buyer who agrees to pay the S5.000. Price in 60 days. Selle following is false? a. Upon receipt of notice of the assignment, Buyer (the obligor) must pay Bank to b. Seller (the assignor) has no right to make further assignments or collect c. Seller is obligated to pay the assignee in the event the buyer fails to pay. d. After notice of the assignment, Bank (the assignee) can sue Buyer directly if Buye does...

  • When goods are shipped FOB Destination and the seller pays the freight charges, the buyer a....

    When goods are shipped FOB Destination and the seller pays the freight charges, the buyer a. adds the freight to the cost of the merchandise b. reimburses the seller c. does not take a discount d. makes no journal entry for the freight

  • When a put option is exercised, the: seller of the option receives the strike price. seller...

    When a put option is exercised, the: seller of the option receives the strike price. seller of the option receives the option premium. buyer of the option sells the underlying asset and receives the option premium. buyer of the option pays the option premium and receives the underlying asset. seller of the option must buy the underlying asset and pay the strike price.

  • 1. Consider this variant of a forward contract. In addition to the usual forward contract with...

    1. Consider this variant of a forward contract. In addition to the usual forward contract with maturity T on stock S, the party which promises to buy pays a premium Sp to the seller at initiation of the contract (i.e., at time t). Determine, by arbitrage arguments how the forward price K (the price agree to pay at time T) must be adjusted. Assume interest is constant and equal to r.

  • During contract negotiations, the seller tells the buyer that the oranges "are the sweetest oranges in...

    During contract negotiations, the seller tells the buyer that the oranges "are the sweetest oranges in this part of the state'. The buyer later discovers that statement to be false and sues the seller under a breach of warranty. What is the likely result? O The seller wins because the buyer failed to inspect the oranges by tasting before purchase The buyer wins because the seller breach an express and implied warranty The buyer wins because the seller breached an...

  • The price that the buyer of a call option pays to acquire the option is called the Group of answer choices forward price...

    The price that the buyer of a call option pays to acquire the option is called the Group of answer choices forward price option premium exercise price execution price strike price

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT