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Quiz 2

This document provides the solution to a quiz question calculating the forward price of $100 using the formula: F0,T = e(rE - rD)T x (x0), where rE is the domestic interest rate of 2%, rD is the foreign interest rate of 5%, T is the time period of 0.25 years, and x0 is the initial exchange rate of $1 = 110 yen. Plugging these values into the formula results in a forward price of ¥10917.8086 for $100.

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Uroona Malik
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31 views1 page

Quiz 2

This document provides the solution to a quiz question calculating the forward price of $100 using the formula: F0,T = e(rE - rD)T x (x0), where rE is the domestic interest rate of 2%, rD is the foreign interest rate of 5%, T is the time period of 0.25 years, and x0 is the initial exchange rate of $1 = 110 yen. Plugging these values into the formula results in a forward price of ¥10917.8086 for $100.

Uploaded by

Uroona Malik
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Quiz 2

Solution :-
F0,T = e (r ¥ −r $ )T ×(x 0 )
F0,T = e (0.02−0.05 )0.25 × 110¥ /$
F0,T = 109.178
forward price for $100 is (100 × 109.1781) = ¥ 10917.8086

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