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  • Um20bb307 20220823154515

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    ANUJ KUMAR
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    The document provides 4 examples of forward contracts involving different underlying assets. In each example, it identifies the parties to the contract, the underlying asset being exchanged, the agreed upon delivery date and price. For each example, it asks to explain the terms of the forward contract, identify the underlying asset, and determine which party benefits if the spot price on the delivery date is above or below the agreed upon price. This allows the reader to understand how forward contracts work and which party makes money depending on market movements.

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    UM20BB307_f41908ce-1ead-11ed-b35e-0a187b1eff80_20220823154515

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    The document provides 4 examples of forward contracts involving different underlying assets. In each example, it identifies the parties to the contract, the underlying asset being exchanged, the agreed upon delivery date and price. For each example, it asks to explain the terms of the forward contract, identify the underlying asset, and determine which party benefits if the spot price on the delivery date is above or below the agreed upon price. This allows the reader to understand how forward contracts work and which party makes money depending on market movements.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    9 views2 pages

    Um20bb307 20220823154515

    Uploaded by

    ANUJ KUMAR
    The document provides 4 examples of forward contracts involving different underlying assets. In each example, it identifies the parties to the contract, the underlying asset being exchanged, the agreed upon delivery date and price. For each example, it asks to explain the terms of the forward contract, identify the underlying asset, and determine which party benefits if the spot price on the delivery date is above or below the agreed upon price. This allows the reader to understand how forward contracts work and which party makes money depending on market movements.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Forward Contract Examples

    • Explain the terms of the Forward Contract and the process of settlement of Forward Contract

    • Identify the underlying asset in the Forward Contract

    • Assuming the parties in the contract do not default on any obligations set out in the contract,
    identify which party will benefit if the spot price of Rice in January is

    • Rs. 32

    • Rs. 20
    2. Deep Exports enters into a contract with Union Bank of India today, to deliver EUR 75000 on 20th
    November 2022. UBI promises to pay on that date for Rs 80.25 per Euro.

    • Explain the terms of the Forward Contract and the process of settlement of Forward Contract

    • Identify the underlying asset in the Forward Contract

    • Assuming the parties in the contract do not default on any obligations set out in the contract,
    identify which party will benefit (Show calculations to illustrate the benefit) if the spot price
    of Euro on 20th November, 2022 is

    • Rs. 75

    • Rs. 84.30

    3. Cargill enters into a contract with HUL today, to deliver 250 Tons of Barley on 20th November 2022.
    HUL promises to pay on that date for Rs 90,000/Ton.

    • Explain the terms of the Forward Contract and the process of settlement of Forward Contract

    • Identify the underlying asset in the Forward Contract

    • Assuming the parties in the contract do not default on any obligations set out in the contract,
    identify which party will benefit (Show calculations to illustrate the benefit) if the spot price
    of Barley on 20th November, 2022 is

    • Rs. 80,000

    • Rs. 90,000

    • Rs. 75,000

    4. Rosneft enters into a contract with IOCL today, to deliver 10,000 Barrels of Crude Oil on 20th
    November 2022. Rosneft promises to pay on that date for USD 800/Barrel

    • Explain the terms of the Forward Contract and the process of settlement of Forward Contract

    • Identify the underlying asset in the Forward Contract

    • Assuming the parties in the contract do not default on any obligations set out in the contract,
    identify which party will benefit (Show calculations to illustrate the benefit) if the spot price
    of crude on 20th November, 2022 is

    • USD 750/Barrel

    • USD 830/Barrel

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