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(Solved): 5) a) What is the fair delivery price for a forward contract on silver with delivery on October 1 , ...



5)
a) What is the fair delivery price for a forward contract on silver with delivery on October 1 , assuming it does not cost an
a) What is the fair delivery price for a forward contract on silver with delivery on October 1 , assuming it does not cost anything to store silver? Please round your answer to the nearest cent. b) On February 1, the price of silver is . What is the fair price of silver with delivery on October 1 ? Please round your answer to the nearest cent. c) On January 1 I entered a forward contract on silver, at the price determined in (a). What is the value of my contract on February 1 ? Assume the contract requires me to take delivery of silver on October 1 . Please round your answer to the nearest cent. Note: You can earn partial credit on this problem.


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a) The fair delivery price for a forward contract on silver with delivery on October 1 can be calculated using the formula:F = Sert Where:F = Fair de
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