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The foreign exchange department at Tokyo’s Daiwa Bank quoted the spot rate on the euro at...

The foreign exchange department at Tokyo’s Daiwa Bank quoted the spot rate on the euro at €0.007185/¥. The 90-day forward rate is quoted at a premium of 4.20 percent on the euro. What is the 90-day forward rate? (Round answer to 6 decimal places, e.g. 15.251945. Use 360 days for calculation.)

Forward rate €________________ /¥

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Answer #1
Formula to calculate Forward premium
Forward premium = ((Forward rate - Spot Rate)/Spot rate)*(360/n)*(100)
Using the above formula we can calculate the forward rate
Calculation of forward rate
0.042 = ((Forward rate - 0.007185)/0.007185)*(360/90)
0.042 = ((Forward rate - 0.007185)/0.007185)*400
0.042*0.007185 = (Forward rate - 0.007185)*4
0.000302 = 4Forward rate - 0.02874
4Forward rate = 0.02874+0.000302
4Forward rate = 0.029042
Forward rate = 0.007260
Forward rate Euro 0.007260/Yen
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