A company has entered into a cash-settled forward contract to sell 10m pounds at $1.5/pound. If the exchange rate at expiration is $1.75/pound, the company will: A. Make a payment of 2.5m dollars B. Receive a payment of 2.5 million pounds C. Make a payment of 10m pounds
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10. A company has entered into a cash-settled forward contract to sell 10m pounds at $1.5/pound. If the exchange rate at expiration is $1.75/pound, the company will: A. Make a payment of 2.5m dollars
B. Receive a payment of 2.5 million pounds
C. Make a payment of 10m pounds
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- The current spot exchange rate is $1.22/€ and the three-month forward rate is $1.30/€. You enter into a short position on €1,000. At maturity, the spot exchange rate is $1.50/€. How much have you made or lost? A. Lost $200 B. Made €200 C. Made $80 D. Made $2001-The current spot exchange rate is $1.55/€ and the three-month forward rate is $1.50/€. You enter into a short three-month position on €1,000. At maturity, the spot exchange rate is $1.60/€. How much money have you made or lost? Made $150 Lost $100 Made €100 Lost $50Suppose a German importer owes an Australian exporting company 150,000 AUD, due in three months. S_0 (EUR/AUD) 0.60 Se (EUR/AUD) 0.50 (0.3) and 0.65 (0.7) Premium on AUD call option R = EUR0.02 Exercise exchange rate E = 0.62 Time to expiry 3 months What is the expected value of payables in AUD under hedge Will the option to hedge be undertaken on the basis of expected spot rate? Explain.
- X is considering whether to accept a 10% discount on buying imported machinery from China at USD 1800 each (normal price USD 2000) OR continue to buy them in Austalta at AUD 2300 each. Payment is to be made on arrival of the machines in 1 year's time. Relevant information: Exchange Rate (Spot) AUD/ USD: 0.8000 Forward Exchange Rate AUD/USD: 0.7700 Import Co borrowing interest rate is 6%. Available USD 1 year deposit rate is 1%. Which one of the below should X do? (a) Continue to purchase at AUD 2300. (b) Accept the discount, buy at USD 1800 and purchase the USD now at AUD/USD 0.8000. (c) Accept the discount, buy at USD 1800 and purchase the USD in one year at AUD/ USD 0.7700. (d) Buy the machines at the undiscounted price of USD 2000 and purchase the USD in one year at AUD/USD 0.8000.Suppose that two counterparties, A and B, enter a three-month forward contract on January 1st, whereby A buys USD1 million at a forward rate of AUD/USD 1.7662. On March 1st, A decides it no longer needs to buy USD1 million on 31 March, so it enters a one-month forward contract to sell USD1 million on 31 March at a forward rate of AUD/USD 1.8000 from counterparty Calculate the net cost to counterparty A, before transaction costs.Spot Exchange Rate is GBP 1.83155 = 1 OMR (For Immediate Delivery). Instead of buying GBP immediately you can enter into a contract with the bank to deliver the currency after 6 months. The bank has quoted 6 months forward rate as GBP1.83355 = 1 OMR. (Home Currency is OMR, which is given as Indirect quotes).
- X is considering whether to accept a 10% discount on buying imported machinery from China at USD 1800 each (normal price USD 2000) OR continue to buy them in Austalta at AUD 2300 each. Payment is to be made on arrival of the machines in 1 year's time. Relevant information: Exchange Rate (Spot) AUD/ USD: 0.8000 Forward Exchange Rate AUD/USD: 0.7700 X borrowing interest rate is 6%. Available USD 1 year deposit rate is 1%. Which one of the below should X do? (a) Continue to purchase at AUD 2300. (b) Accept the discount, buy at USD 1800 and purchase the USD now at AUD/USD 0.8000. (c) Accept the discount, buy at USD 1800 and purchase the USD in one year at AUD/ USD 0.7700. (d) Buy the machines at the undiscounted price of USD 2000 and purchase the USD in one year at AUD/USD 0.8000.Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.3356 S$/US$. You have just placed an order for 30,000 motherboards at a cost to you of 218.50 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $175 each. a. Calculate your profit if the exchange rate stays the same over the next 90 days. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. Calculate your profit if the exchange rate rises by 10 percent over the next 90 days. Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. Calculate your profit if the exchange rate falls by 10 percent over the next 90 days. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. d. What is the break-even exchange rate? Note: Do not round…Suppose one-year German Treasury bill pays 4.13% and one-year Canadian Treasury bill pays 2.95%. The current spot exchange rate is 1 Euro (EUR)= 1.3694 Canadian dollar (CAD) and the one-year forward exchange rate is 1 EUR = 1.3335 CAD. How much arbitrage profit can an investor earn on an investment value of CAD 4 million Answer: CAD (DO NOT ROUND YOUR CALCULATIONS UNTIL YOU REACH THE FINAL ANSWER. ENTER YOUR RESPONSE ROUNDED TO TWO DECIMAL PLACES AND NO SEPARATOR FOR THOUSANDS.)
- Case: ER001 on Forex in Trade Finance Bill Amount: USD 100,000.00 You (AD1 Bank in India) are negotiating an Export Bill (under LC) under the Post shipment finance limit (in INR) for your exporter client. You have agreed with client on the post- shipment finance Interest Rate as 10% p.a., payable upfront. How much INR would you credit to the exporter's account on negotiation. Payment Terms: At 60 days after sight Exchange Rate Margin: 0.15% Spot USD/INR=75.5000/5500 Forward Premium 1M: 0.0800/0.1000 Forward Premium 2M: 0.1400/0.1550 • Forward Premium 3M: 0.2300/0.2400 More information provided here ->A Canadian supplier is offering two options to his American client to pay for an equipment: paying 13,000 Canadian dollars now or paying 10,000 US dollars in 6 months. If the annual interest rate for the Canadian dollar is 5% and for the US dollar is 8%, what is the "implied" exchange rate? Question 5 options: CAD0.7581/USD. CAD1.3520/USD. CAD0.7505/USD. CAD1.3190/USD. CAD1.3325/USD. CAD0.7396/USD.You sold goods for USD 2 million and expected to receive the proceeds in 2 months. You entered into a forward exchange contract (“FEC”) at AUD/USD 0.9600. You have been advised your customer cannot pay the USD 2m until 3 months after the FEC date. Your bank agrees that you can extend your FEC at the historical rate. Current spot rate is AUD/USD 0.8800 with USD and AUD interest rates 1% pa and 6% pa respectively. What is the approximate amount of AUD you will now receive at the revised future date: Select one: A. AUD 2,301,000 B. AUD 2,083,000 C. AUD 2,273,000 D. AUD 2,109,000