The correct answer is C because an increase in the risk-free rate raises the opportunity cost of holding a cash position and reduces the present value of the forward price. This decrease in the present value of the forward price enhances the value of the contract to the buyer. Mathematically, the mark-to-market value of the forward contract at time t, from the buyer's perspective, is given by:

V(t) = S_t - F_0(T) * (1 + r)^-(T - t)

where:

• S_t is the spot price of the underlying asset at time t,
• F_0(T) is the forward price agreed at inception,
• r is the risk-free rate,
• T is the maturity date of the contract.

The higher risk-free rate lowers the present value of F_0(T), thereby increasing V(t).