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What is an option? How does an Option differ from a forward or future contract?
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Solved in 3 steps
- Describe the accounting for the fair value option.Is the “forward price” the same thing as the “value of the forward contract” Explain.1. What is the difference between a spot and a forward rate? If the forward rate is not at parity during the outset of the contract, which theory of term structures does this violate?