An investor enters into a short forward contract to sell


An investor enters into a short forward contract to sell 100,000 British pounds for US dollars at an exchange rate of 1.4000 US dollars per pound. How much does the investor gain or lose if the exchange rate at the end of the contract is

(a) 1.3900 and
(b) 1.4200?
(c) Draw the investor's profit diagram on this forward.

 

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Finance Basics: An investor enters into a short forward contract to sell
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