Question

The foreign exchange department at Tokyo’s Daiwa Bank quoted the spot rate on the euro at €0.007165/¥. The 90-day forward rate is quoted at a premium of 5.30 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 €___________/¥

Answer #1

**Solution:**

The formula for calculating the annualized forward premium / discount is

= [ ( Forward rate – Spot rate ) / Spot rate ] * ( 360 / No. of days of forward ) * 100

As per the information given in the question we have

Spot rate 1 ¥ = € 0.007165

Premium on the euro = 5.30 % = 0.0530

No. of days of forward = 90 days

Applying the above values in the formula we have:

0.0530 = [ ( Forward rate – 0.007165 ) / 0.007165 ] * ( 360 / 90 )

0.0530 * ( 90 / 360 ) * 0.007165 = Forward rate – 0.007165

Forward rate – 0.007165 = 0.0530 * ( 90 / 360 ) * 0.007165

Forward rate – 0.007165 = 0.00009494

Forward rate = 0.007165 + 0.00009494 = 0.00725994

= 0.007260 ( when rounded off to six decimal places )

**Thus the forward rate =** **€**
**0.007260 / ¥**

The foreign exchange department at Tokyo’s Daiwa Bank quoted the
spot rate on the euro at €0.007130/¥. The 90-day forward rate is
quoted at a premium of 5.80 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.)

The foreign exchange department at Tokyo’s Daiwa Bank quoted the
spot rate on the euro at €0.007215/¥. The 90-day forward rate is
quoted at a premium of 4.60 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.)

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 €________________ /¥

The spot rate on the London market is £0.5525/$, while the
90-day forward rate is £0.5587/$. What is the annualized forward
premium or discount on the British pound? (Round answer
to 2 decimal places, e.g. 17.54%. Use 360 days for
calculation.)

Your answer is incorrect. Try again.
The spot rate on the London market is £0.5525/$, while the
90-day forward rate is £0.5587/$. What is the annualized forward
premium or discount on the British pound? (Round answer
to 2 decimal places, e.g. 17.54%. Use 360 days for
calculation.)
Forward premium or (discount)
%

The spot rate of exchange between the U.S. dollar and the euro
is 1.35 (dollar/euro) and the three-month forward rate of exchange
is 1.29.
Select one:
a. The euro is selling at a discount and the standard forward
discount is 17.78 percent.
b. The euro is selling at a premium and the standard forward
premium is 18.60 percent.
c. The euro is selling at a premium and the standard forward
premium is 15.78 percent.
d. The euro is selling at...

Section 2 Calculations.
5pt each, 50 pts total. Show your work!
Suppose the dollar-pound exchange rate is quoted as $1.551 =
£1.00 and the dollar-yen exchange rate is quoted at $1.00 = ¥119.
What is the cross exchange rate, £ /¥? Round to 4 decimal
places.
Suppose the dealer provides this spot rate quote: S($|£) 1.8515
– 04. If you were to buy $1,000,000 worth of British pounds and
then sell them five minutes later. Calculate the dealer profit in...

What is the difference between a spot foreign exchange rate and
a forward foreign exchange rate? How could an Indonesian exporter
use the forward rate to hedge foreign exchange risk?

Suppose we have the
following exchange rate quotes:
in US$
per US$
Euro area
(€)
1.3604
.7351
Mexico
(Ps)
.0781
12.8041
a. If you have $200, you can get euros.
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16. Use the €/$ exchange rate
in your calculation.)
b. One euro is worth $ . (Do not round
intermediate calculations and round your answer to 4 decimal
places, e.g., 32.1616.)
c....

Suppose we have the following exchange rate quotes:
in US$
per US$
Euro area (€)
1.3570
.7369
Mexico (Ps)
.0781
12.8057
a. If you have $250, you can get euros.
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16. Use the €/$ exchange rate
in your calculation.)
b. One euro is worth $ . (Do
not round intermediate calculations and round your answer to 4
decimal places, e.g., 32.1616.)
c. If you...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 8 minutes ago

asked 41 minutes ago

asked 43 minutes ago

asked 46 minutes ago

asked 51 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 3 hours ago