One month after you entered into your forward contract what


Suppose you entered into a long position of a 2-month Japanese Yen (¥) forward contract at US$0.0094/¥ for 100,000¥. One month after you entered into the forward contract, we have the following quotation:

Spot Rate: US$0.0093/¥
US Dollar Risk Free Rate: APR=3%, compounded continuously
Japanese ¥ Riskfree Rate: APR=2%, compounded continuously

(a) One month after you entered into your forward contract, what would be the "right" one-month forward price for Japanese Yen (¥)

(b) One month after you entered into your forward contract, what would be the value of your forward contract (due in a month for delivery of 100,000 Yen @ US$0.0094/¥)?

Solution Preview :

Prepared by a verified Expert
Finance Basics: One month after you entered into your forward contract what
Reference No:- TGS0819295

Now Priced at $30 (50% Discount)

Recommended (93%)

Rated (4.5/5)