Explanation

The value of a forward contract to the seller at expiration is calculated as the difference between the forward price and the spot price at expiration, multiplied by the number of shares. Here's the breakdown:

1. Correct Answer (B): The value to the seller is calculated as: [ \text{Forward Price} - \text{Spot Price at Expiration} = $285 - $282 = $3 ] Multiplying by the number of shares (2,000) gives: [ $3 \times 2,000 = $6,000. ]

2. Incorrect Option (A): This represents the value to the buyer, not the seller. The buyer's value is the negative of the seller's value: [ \text{Spot Price at Expiration} - \text{Forward Price} = $282 - $285 = -$3 ] Multiplying by the number of shares gives: [ -$3 \times 2,000 = -$6,000. ]

3. Incorrect Option (C): This incorrectly uses the spot price at inception instead of the spot price at expiration: [ \text{Forward Price} - \text{Spot Price at Inception} = $285 - $275 = $10 ] Multiplying by the number of shares gives: [ $10 \times 2,000 = $20,000. ] (Note: The original option C was $14,000, but the correct calculation based on the formula would be$20,000. This discrepancy suggests a possible error in the original question or OCR.)

Key Takeaway

The value of a forward contract to the seller at expiration is determined by the difference between the agreed forward price and the spot price at expiration, multiplied by the contract size.