3 months ago, you bought €2,000,000 1-year forward at the forward rate of 1.23 $/€. If current 9-month interest rates are 7% p.a. in the U.S. and 4% p.a. in the Eurozone, and the current spot exchange rate for euros is 1.18 $/€, then how much is your forward contract worth right now? If the forward contract were terminated today, would you expect to have to pay or receive this amount? Explain in detail how you arrived at your answer.

Answer rating: 100% (QA)

Solution Given 1 Principal amount in Euro 2000000 2 Principal in US 3 months ago at the contract rat... View the full answer