The spot rates, 3- month forward rates and 3-month future (speculation) spot rates for the MYR respectively
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Question:
The spot rates, 3- month forward rates and 3-month future (speculation) spot rates for the MYR respectively are as below:
Buy | Sell | |
MYR/$ | ||
Spot | 4.5311 | 4.6311 |
3-month Forward | 4.5445 | 4.6445 |
3-month Future (speculation) | 4.7645 | 4.8645 |
US interest rates: 2% per annum
Malaysia interest rates: 4 % per annum
If your company is prepared to put MYR 1 million at risk on the deal, show and name clearly at least TWO possible strategies that might be taken by you. Ignore whether the strategies could result to a loss or gain. Consider all interest rate implications.
Related Book For
Multinational Finance Evaluating Opportunities Costs and Risks of Operations
ISBN: 978-1118270127
5th edition
Authors: Kirt C. Butler
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