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The following data are taken from the financial market pages of an Australian newspaper.
Forward Margins
Forward Contract Forward Margins (Buy A$/Sell A$)
1 month 0/1
2 month 1/2
3 month 1/3
6 month 2/4
1 year 0/1
2 years -16/-8
3 years -51/-11
The data under the “Forward Margins” column represent the forward contracts for the US
dollar with respect to the Australian dollar (given in points form).
(a) Using this data, and the bid-ask for spot USD at 0.7144 to 0.7145, compute the outright
bid/ask rates for the following forward contracts:
(i) 1 month
(ii) 6 month
(iii) 2 years
(iv) 3 years
(b) Calculate the forward premium for the following contracts:
(i) 2 month
(ii) 3 month
(iii) 6 month
(iv) 1 year
c) You expect to receive US$ 70,000 in 6 months. What amount in A$ will that convert into
of you use the above forward rates?
d) You need to buy US$ 500,000 in 2 years. How many A$ will you need if you use the
forward rates above?
e) What do the forward rates indicate in terms of whether the A$ is expected to strengthen or
weaken with respect to the US dollar?
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- The following data are taken from the financial market pages of an Australian newspaper.Forward MarginsForward Contract Forward Margins (Buy A$/Sell A$)1 month 0/12 month 1/23 month 1/36 month 2/41 year 0/12 years -16/-83 years -51/-11The data under the “Forward Margins” column represent the forward contracts for the USdollar with respect to the Australian dollar (given in points form).(a) Using this data, and the bid-ask for spot USD at 0.7144 to 0.7145, compute the outrightbid/ask rates for the following forward contracts:(i) 1 month(ii) 6 month(iii) 2 years(iv) 3 years(b) Calculate the forward premium for the following contracts:(i) 2 month(ii) 3 month(iii) 6 month(iv) 1 year c) You expect to receive US$ 70,000 in 6 months. What amount in A$ will that convert intoof you use the above forward rates? d) You need to buy US$ 500,000 in 2 years. How many A$ will you need if you use theforward rates above? e) What do the forward rates indicate in terms of whether the A$ is expected to…Suppose that on June 5, a Japanese Yen future contract is purchased at the ¥ 123 per dollar (opening price). Contract is for $ 5,000. Initial margin level is 15% of the value of the contract, and maintenance level is %10 of the value of the contract. The future price is ¥ 120 per dollar on June 6. There will be 15% increase in future price on June 7 and 8% decline on June 8? What is the value of the actual margin at the end of the date June 8? (ASSUMPTION: As margin account reaches above the initial margin level, withdraw the amount above the initial margin level)Give typing answer with explanation and conclusion 1. You enter an NDF to buy UYU (Uruguayan Peso) for $.0363/UYU. The contract size is UYU50,000,000 and the contract matures in six months. If the spot rate is $.0381/UYU in six months, will you owe the bank money, or will the bank owe you money? How much in total? If the spot rate is $.0346/UYU in six months, will you owe the bank money, or will the bank owe you money? How much in total?
- 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 C. a) Calculate the net cost to counterparty A, before transaction costs. b) Suppose a German importer owes an Australian exporting company 150,000 AUD, due in three months. ?_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 1) What is the expected spot rate? 2) What is the expected value of payables in AUD under hedge? 3) Will the option to hedge be undertaken on the basis of…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 C. a) Calculate the net cost to counterparty A, before transaction costsSuppose 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.
- Assume the time from acceptance to maturity on a $2,280,000 banker’s acceptance is 90 days. Further assume that the importing bank’s acceptance commission is 1.25 percent and that the market rate for 90-day B/As is 7 percent. Determine the amount the exporter will receive if he holds the B/A until maturity and also the amount the exporter will receive if he discounts the B/A with the importer’s bank.A treasurer of a company got the following quotation from an FX dealer: "The dollar euro is sixty-two ten-fifteen, thirteen-thirty-one". What is the forward rate? Select one: a. USD/EUR 0.6210-15 b. AUD/EUR 0.6210-15 c. USD/EUR 0.6223-46 d. AUD/EUR 0.6223-46 e. USD/EUR 0.6184-97Hedging Receivables with a forward contract On December 15, the Chiquita Company, a company based in Ecuador, sells bananas to a company in Italy and expects to receive 1 million euro on March 15. The currency used in Ecuador is the US dollar. On December 15, Chiquita hedges the receivable with a forward contract with a delivery date of March 15. On December 15, the following are quotes for the euro. Bid Ask Spot Rate $1.07 $1.08 Forward Rate $1.11 $1.12 The forward rate is for a forward contract with a March 15 delivery date. On March 15, the following are quotes for the euro. Bid Ask Spot Rate $1.12 $1.13 Forward Rate $1.12 $1.13 The forward rate is for a forward contract with a March 15 delivery date. What is Chiquita’s net cash flow in dollars on December 15? On March 15? Do not combine cash flows from different dates. For all cash flows, make sure you state the date of the cash flow. Show how you calculated your answers.
- Required: Assume the time from acceptance to maturity on a $2,280,000 banker’s acceptance is 90 days. Further assume that the importing bank’s acceptance commission is 1.25 percent and that the market rate for 90-day B/As is 7 percent. Determine the amount the exporter will receive if he holds the B/A until maturity and also the amount the exporter will receive if he discounts the B/A with the importer’s bank. Note: Do not round intermediate calculations.Study this Case and Answer Question Asked Below: On 19 April Following are the Spot Rates Spot EUR/USD 1.2000 USD/INR 44.8000 Following are the quotes for European Type Options Currency Pair Call/Put Strike Price Premium Expiry Date EUR/USD Call 1.2000 $0.035 July 19 EUR/USD Put 1.2000 $0.04 July 19 USD/INR Call 44.8000 Rs.0.12 Sep 19 USD/INR Put 44.8000 Rs.0.04 Sep 19 If a dealer is Bullish on USD. He should a. Sell EUR/USD Put Option b. Buy EUR/USD Call Option c. Buy EUR/USD Put Option d. None of the aboveThe annualized forward (blank) for the Canadian dollar/U.S. dollar exchange rate when market quotes are CAD1.38 per USD spot and CAD1.42 per USD quoted on a six month forward contract is (blank) a. discount; 2.90%. b. premium; 5.80%. c. premium; 2.90%. d. discount; 5.80%.