At time zero you enter a long position in a forward contract on 1 share of the stock XYZ at the forward price of 10.00. Moreover, you buy one exotic derivative, with the same maturity as the forward contract, which pays to the holder exactly one share of the stock if the product S(0)×S(T) of the price today and the price at maturity is above 100.00, and which pays the holder exactly zero if that product is below 100.00. The today's stock price is 10.00 and today’s selling price of one derivative of this kind is 6.00. Assume that, after those trades are put in place, the initial capital you have (need) is invested (borrowed) at zero interest rate. In your answer, use minus sign for a loss.

Enter your total profit or loss if at maturity the price of one stock share is 11.00:

6-correct

>> Enter your total profit or loss if at maturity the price of one stock share is 9.00:

-7-correct

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At time zero you enter a short position in a forward contract on 1 share of the stock XYZ at the forward price of 10.00. Moreover, you buy one exotic derivative, with the same maturity as the forward contract, which pays to the holder exactly one share of the stock if the product S(0)×S(T) of the price today and the price at maturity is above 100.00, and which pays the holder exactly zero if that product is below 100.00. The today's stock price is 10.00 and today’s selling price of one derivative of this kind is 6.00. Assume that, after those trades are put in place, the initial capital you have (need) is invested (borrowed) at zero interest rate. In your answer, use minus sign for a loss.

Enter your total profit or loss if at maturity the price of one stock share is 12.00:


>> Enter your total profit or loss if at maturity the price of one stock share is 6.00:

To calculate the total profit or loss at maturity, we need to consider the outcome of both the forward contract and the exotic derivative.

For the forward contract:
As you entered a long position in the forward contract on 1 share of the stock XYZ at the forward price of 10.00, the profit or loss from the forward contract is equal to the difference between the stock price at maturity and the forward price.

If the price of one stock share is 11.00 at maturity, the profit from the forward contract would be $11.00 - $10.00 = $1.00.

For the exotic derivative:
The exotic derivative pays the holder exactly one share of the stock if the product of the price today and the price at maturity is above 100.00. If the product is below 100.00, it pays the holder exactly zero.

In this case, the product S(0) × S(T) = 10.00 × 11.00 = 110.00, which is above 100.00. So, the derivative pays the holder exactly one share of the stock.

Therefore, for the exotic derivative, the profit would be the difference between the stock price at maturity and the selling price of the derivative, which is $11.00 - $6.00 = $5.00.

Total profit or loss:
To calculate the total profit or loss, we need to add up the profits or losses from the forward contract and the exotic derivative.

For the forward contract, the profit is $1.00, and for the exotic derivative, the profit is $5.00. Adding them together, the total profit is $1.00 + $5.00 = $6.00.

So, if at maturity the price of one stock share is 11.00, the total profit would be $6.00.