1. Explain how both the intrinsic value and the time value are measured for a forward contract to sell and for a put option. 2. What is the exposure to risk associated with a firm commitment to sell...

1. Explain how both the intrinsic value and the time value are measured for a forward contract to sell and for a put option.

2. What is the exposure to risk associated with a firm commitment to sell inventory that a fair value hedge is intended to reduce?