59 Forward Price

Summary unavailable. Hi, in this video, we're going to discuss how to put a price on the forward price. From previous video, we have seen that the forward contract does not involve any cash exchange at the moment when new parties are entering the contract. The cash exchange only happens at the time of maturity. But the question is, what is going to be the fairly priced forward price at maturity? So to solve this problem, we will need to use a technique called the replicating portfolio. So it is based on the law of one price. It's based on law of one price. So essentially, if two different assets or portfolios give you the same return with the same risk profile, they should be priced the same. Otherwise, you will