46-Mr. Ahmed has to make a payment of 5 million GBP to a UK company after 30 days for the purchase of goods. Mr. Ahmed expects risk of currency fluctuation and purchased the forward contract at OMRO.2500/GBP. On the maturity date, the current exchange rate is offered at OMRO.2000/GBP. Which one of the following is the gain/loss from the forward contract to

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter13: Marketable Securities And Derivatives

Section: Chapter Questions

Problem 21E

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Question

46-Mr. Ahmed has to make a payment of 5 million GBP to a UK company after 30 days for the purchase of goods. Mr. Ahmed expects risk of currency fluctuation and purchased the forward contract at OMRO.2500/GBP. On the maturity date, the current exchange rate is offered at OMRO.2000/GBP. Which one of the following is the gain/loss from the forward contract to Mr. Ahmed? O a. Ahmed losing OMR 125,000 due to currency forward contract O b. Ahmed gaining OMR 125,000 due to currency forward contract O c. None of the options O d. Ahmed losing OMR 100,000 due to currency forward contract

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21-Mr. Ali is an Omani exporter and expected to receive 200 million INR after 30 days from its Indian importer. Mr. Ali expects that the INR may depreciate by the time of receiving. To protect from this risk of losing local currency at the time of exchange on maturity, Mr. Ali enters into the currency forward agreement with Bank Muscat. The forward price agreed between them at INR 200/OMR. After 30 days, assume, the exchange rate is INR 125/OMR in the open market. Which one of the following is the gain/loss from the forward contract to Mr. Ali? a. Ali gaining OMR 1,600,000 due currency forward contract b. Ali losing OMR 2,000,000 due currency forward contract c. None of the options d. Ali gaining OMR 1,000,000 due currency forward contract
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