Question: 3. A) What do you understand by a non-deliverable forward contract -Explain with example? B) Compute the annualized forward discount or premium, State whether your

3. A) What do you understand by a non-deliverable forward contract

3. A) What do you understand by a non-deliverable forward contract -Explain with example? B) Compute the annualized forward discount or premium, State whether your answer is a discount or premium. 1. Mexican peso 90-day forward rate is $.102 and spot rate is $.10. II. British Pound 180-day forward rate is $1.672 and spot rate is $1.681. C) Under each condition stated below what should be the steps taken by each individual at maturity to get the maximum benefit (Assume premium on option contract is zero): Situation On maturity date A firm buys a call option of US $ to hedge its open position Strike price > Spot rate of US$ Spot price > Strike rate of C$ An international bidder buys a call option on C $, afterwards his bid was rejected A speculator purchases a future contract to buy US $ Spot rate > Exercise price of US $

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