100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Forex: Tutorial questions and Answers £6.11   Add to cart

Other

Forex: Tutorial questions and Answers

 8 views  0 purchase

A set of questions related to forex in corporate treasury management.

Preview 1 out of 4  pages

  • February 17, 2022
  • 4
  • 2021/2022
  • Other
  • Unknown
  • risk management
All documents for this subject (1)
avatar-seller
israelzemona
Extra questions FOREX

1. A sterling-based exporter invoices goods worth US $40,000 on 1st January
with payment due in three months time ie 1st April.

The spot rate on 1st January is US $ 1.50 = £1.

The bank agrees a three month forward fixed contract at a rate of US $ 1.481.

This forward contract is made on first of January.

Requirement

Complete the different outcomes which will occur on 1st April in table below.
State whether the forward is settled or closed out and the financial outcome. All
workings should be placed in the workings section at the back of the answer
booklet.


Spot rate 1st Dollars Received Outcome
April by the Exporter?

US $ 1.65 = £1 Yes
$40,000/1.481=£27,008.78
received by the company



US $ 1.65 = £1 No
close out
$40,000/1.481=£27,008.78
$40,000/1.65=£24.242.42
=2,766.36 received by the
co.

US $ 1.35 = £1 Yes
$40,000/1.481=£27,008.78
received by the company


US $ 1.35 = £1 No close out
$40,000/1.481=£27,008.78
$40,000/1.35=29,629.63
=£2,620.85 paid by the co.


2. Assuming today is the 1st January

• The bank writes a 3 month call option in favour of the importer, strike price
US $1.30

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller israelzemona. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for £6.11. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

73216 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now

Start selling
£6.11
  • (0)
  Add to cart