Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia. Suppose the spot exchange rate at the time borrowing was Rs63/$ and you promised to repay the loan after six months with a forward currency rate of Rs68/$ without any interest. Required: a) What is the amount of money in dollars that your friend needs pay to an authorised currency exchanger in Australia with a 20$ administration fee to transfer the loan?
Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia. Suppose the spot exchange rate at the time borrowing was Rs63/$ and you promised to repay the loan after six months with a forward currency rate of Rs68/$ without any interest. Required: a) What is the amount of money in dollars that your friend needs pay to an authorised currency exchanger in Australia with a 20$ administration fee to transfer the loan?
ChapterP2: Part 2: Exchange Rate Behavior
Section: Chapter Questions
Problem 1Q
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Question
Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia. Suppose the spot exchange rate at the time borrowing was Rs63/$ and you promised to repay the loan after six months with a forward currency rate of Rs68/$ without any interest.
Required:
a) What is the amount of money in dollars that your friend needs pay to an authorised currency exchanger in Australia with a 20$ administration fee to transfer the loan?
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