Suppose you are a U.S. based company and exports goods fromGermany. In 60 days, you expect to receiv

Suppose you are a U.S. based company and exports goods fromGermany. In 60 days, you expect to receive payment for a shipmentof goods from the Germany worth 1,000,000 Euros (settlement). TheUS risk free discrete rate is 2.5% and the Euro risk free discreterate is 5.0%, and the current FX spot rate is $1.10 per Euro. A.    You expect theEuro currency to decrease against the US dollar over next 60 days.Please explain, whether you should buy or short a forward contracton the FX currency to hedge the foreign exchange risk? B.     What is theno-arbitrage profit “Interest Rate Parity” forward price (Fo) toenter a forward contract expiring in 60 days? (up to 4 decimalplaces) C.     After 30days since the US company entered into a forward contract agreement(at “Interest Rate Parity” forward price), the FX spot price forUSD per pound is now, $1.08 per Euro. The US risk free and Eurorisk free interest rates have stayed the same. What is the value ofthe US company’s position in the Forward contract at this 30-daymark of the 60-day forward contract (Vt)? (up to 4 decimalplaces)
NOTE: (state gain or loss on thecurrency rate and the total Amount based on cashsettlement) D.    At expiration ofthe forward contract (at 60 days), assuming forward price agreedwas “Interest Rate Parity” price, and the USD per pound currencyspot price is $1.05 per pound, what is the value of the USCompany’s forward contract position (VT)? (up to 4decimal places)
NOTE: (state gain or loss on thecurrency rate and the total Amount based on cashsettlement) . . .

 

Do you need a similar assignment done for you from scratch? We have qualified writers to help you. We assure you an A+ quality paper that is free from plagiarism. Order now for an Amazing Discount!
Use Discount Code “Newclient” for a 15% Discount!

NB: We do not resell papers. Upon ordering, we do an original paper exclusively for you.

The post Suppose you are a U.S. based company and exports goods fromGermany. In 60 days, you expect to receiv appeared first on Affordable Nursing Writers.