Why do we factor in the "loss on asset" and "gain on asset"?
For example, in part d. The value is 98-105= -7 (which is a gain to the short). Why do I have to factor in the loss of 2?
Thanks!作者: kkn006 时间: 2011-7-13 13:47
in those problems they are just showing you how the entire deal looks like.
when you think in terms of the gain/loss on the contract, the underlying itself (which is by itself a separate part) also is undergoing a gain or a loss.
seller of the contract may gain on the contract, but could end up losing on the asset. So they are providing a total picture..
