Question: A dealer buys USD 1,000,000 forward for delivery in, two months at AUD 1.2335/USD and simultaneously sells USD 1,000,000 forward for delivery in three months

A dealer buys USD 1,000,000 forward for delivery in, two months at AUD 1.2335/USD and simultaneously sells USD 1,000,000 forward for delivery in three months at AUD 1.2385/USD. This foreign exchange transaction is equivalent to:

  1. Buying two months USD forward at AUD 1.2335/USD and selling three months AUD forward at USD 0.8074/AUD
  2. Selling two-months USD forward at AUD 1.2335/USD and buying three months AUD forward at USD 0.8074/AUD
  3. Selling two-months USD forward at AUD 1.2335/USD and selling three months AUD forward at USD 0.8074/AUD
  4. Buying two-months USD forward at AUD 1.2335/USD and buying three months AUD forward at USD 0.8074/AUD

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

3 Suppose that instead of measuring shortage in terms of cost per shortage year, a cost of S dollars is incurred for each unit the firm is short. This cost does not depend on the length of time...

Q:

1. Describe the three function of the foreign exchange market. Use examples in your answers ( you may want to utilize the internet to find examples of hedging, etc.) 2. The foreign exchange market is...

Q:

1. Describe the three function of the foreign exchange market. Use examples in your answers ( you may want to utilize the internet to find examples of hedging, etc.) 2. The foreign exchange market is...

Q:

Centre 1 1 CAD and Client Rod to me 5 Cliew June 2013 Clewistophe.PY 600 W An Adid,000 CAD CASH Alden puhes CAD CASH do An Adidas CAD CASH Clers worth For Each of the following scenarios solve for...

Q:

1. A well-established, large, Indian-based MNE will probably be most adversely affected by which of the following elements of firm value? a. access to qualified labor pool b. an open marketplace c....

Q:

Evaluate the potential gains and losses for forwards,future,call options,put options and swaps. Outline and describe the different risks that each type of derivative contract faces. Describe...

Q:

1) The ________ is the mechanism by which participants transfer purchasing power between countries, obtain or provide credit for international trade transactions, and minimize exposure to the risks...

Q:

I need help understanding this project... Submit the Ratio Analysis portion of the final project. For this milestone, you will be analyzing the financial performance of Starbucks using the financial...

Q:

Final Project 1 Computerized Accounting with Sage 50 Level 2 SI2O Copyright 2022 Project Code: SI1O v7-1 Project 1 Released: July 2012 Revised: November 24, 2022 Computerized Accounting with Sage 50...

Q:

Computerized Accounting with Sage 50 Level 2 Dermal Decor INTRODUCTION This project will test your understanding of the Sage 50 Accounting application and your ability to apply the features of this...

Q:

Create two divisions starting April 1, 2025. 1.Sales 2. Service There are no balances forward. Select Status: Completed Back up your work files. Continue with the original working copy,...

Q:

#5) (6 Marks) Mr. Willis had purchased an apartment block in 2001 and the following details are provided regarding this property: UCC-Class 1 Total Cost 4% Building $72,200 $117,200 $189,400 Land...

Q:

Consider the validation-based concurrency-control scheme of Section 16.3. Show that by choosing Validation (Ti), rather than Start (Ti), as the timestamp of transaction Ti, we can expect better...

Q:

Critically assess the argument that economic globalization is primarily a political project.

Q:

Which of the following are problems with identifying users of ABC? Multiple select question. ABC means different things to different organizations. Organizations will announce the discontinuance of...

Q:

3 What can be learned from Indian HRD, and its integration of Western and nonwestern approaches to managing people, in order that it can be applied in African countries?

Q:

Corporations are discovering that their core capabilities lie not in particular products or product categories, but in unique expertise.

Q:

CEOs are aiming their internal and external processes directly at customer satisfaction.