Minus S0 is the cash flow at time T equal to 0,

S0 divided by d(0, T) is the cash flow at time capital T.

This is just a fancy way of writing, S0 times 1 plus

r to the power capital T.

But because now the interest rate could

have a term structure associated with it, instead

of writing it as 1 plus r to the capital T, I'm just using the discount.

And that allows me to give you a more

general result, which doesn't rely on flat interest rates.

What is the net cash flow?

I paid nothing for this portfolio. What is the cash flow at time capital T?

It's S0 divided by d(0, T) minus F. The portfolio

has a deterministic cash flow at time capital T and the cost is

equal to 0, therefore, discounted, you should get price V equal to 0.

So S0 divided by D0 T minus F times D0 T.

Discounted back you end up getting equal to 0 and