What is a risk-freeusd-brl 90-day forward rate quote that


Question: A client, JetPort Systems Inc., of your bank has recently completed a contract to upgrade the radar installation at Sao Paulo's international airport. The Brazilian government will wire a payment of 200M Reals (BRLs) to JetPort's bank in 90 days to settle the contract. The CFO of JetPort asks the bank for 90-day forward USD-BRL exchange rate quote as a hedge against unexpected depreciation in the BRL. The spot exchange rate is S(USD/BRL) = $.40/BRL. The 90-day USD and BRL interbank lending and borrowing interest rates are iUSD = 2% and iBRL= 5%, respectively.

What is a risk-freeUSD-BRL 90-day forward rate quote that the bank can offer JetPort's CFO? (in USDs per BRL). Show exactlyhow the bank would set uptheforward rate in the interbank loan market.

Request for Solution File

Ask an Expert for Answer!!
Macroeconomics: What is a risk-freeusd-brl 90-day forward rate quote that
Reference No:- TGS02515057

Expected delivery within 24 Hours