Question

If the spot rate was $1.0130/C$ and the 90-day forward rate was $1.0240/C$, how much more (in U.S. dollars) would you receive by selling C$1,059,000 at the forward rate than at the spot rate? Additional revenue $______________

Answer #1

**Solution:**

As per the information given in the question we have

Spot rate of 1 C$ = $ 1.0130

90 day Forward rate of 1 C$ = $ 1.0240

Amount receivable = C$ 1,059,000

At spot rate amount received on sale = Amount receivable * Spot rate

= C$ 1,059,000 * $ 1.0130

= $ 1,072,767.00

At Forward rate amount received on sale = = Amount receivable * Forward rate

= C$ 1,059,000 * $ 1.0240

= $ 1,084,416.00

The Additional revenue = $ 1,084,416.00 - $ 1,072,767.00 = $ 11,649.00

**Thus the additional revenue received on selling the
1,059,000 C$ at the forward rate = $ 11,649.00**

If the spot rate was $1.0010/C$ and the 90-day forward rate was
$1.0108/C$, how much more (in U.S. dollars) would you receive by
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Additional revenue $

The following is market information:
Current spot rate of pound
=
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90-day forward rate of pound
=
$1.46
3-month deposit rate in U.S.
=
1.1%
3-month deposit rate in Great Britain
=
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