Exercise 1: Calculate Forward Exchange Rate in 5 Following Situations
Exercise 1: Calculate Forward Exchange Rate in 5 Following Situations
Exercise 1: Calculate Forward Exchange Rate in 5 Following Situations
Exercise 2:
1. A multinational company is going to
hedge for an inflow of 100,000 USD in the
future. This firm engages in a forward
contract to buy USD by VND in the next 90
days with current annual interest rate of USD
and VND are respectively 1.5-2.5% and 6-
8%. At the contract time, the spot rate of
USD/VND is 21,000/21,500. Define profit/
loss of the firm at maturity if the spot rate of
USD/VND in the next 90 days will
respectively be: 20,933/21,625;
21,058/21,750; 21,183/21,875;
21,308/22,000; 21,433/22,125. Diagram?
2. An American exporter will receive an
amount of 500,000CHF from a Swiss
importer in the next 3 months. This
American firm engages in a forward contract
to sell CHF for USD in the next 03 months
with current annual interest rate of CHF and
USD are respectively 1.25-2.00% and 2.5-
3.5%. At the time of signing (present), the
spot rate of CHF/USD is 0.4880/20. Define
profit/ loss at maturity if the CHF/USD spot
rate at maturity will respectively be:
0.4686/0.4748; 0.4786/0.4848;
0.4886/0.4948; 0.4986/0.5048;
0.5086/0.5148. diagram?
3. Customer is engaging in an Option
contract (American type) to buy 350,000
USD by VND in 180 days. Strike price is
defined as 180-day forward exchange rate
with 135 VND/USD premium. The current
USD/VND spot rate is 20,000/20,500. The
USD and VND annual interest rate are
respectively 1.5-2.5% and 7.5-10%. Define
profit/ loss of this customer at maturity in
the next 180 days if the spot rate at maturity
of USD/VND will respectively be :
19,629/20,500; 20,129/21,000; 20494/
21,365; 20,629/21,500; 21129/22,000.
Define the Break-even point? Diagram?