Consider the issue of mark-to-market value. Suppose that on January 1st, 2022, you entered the following contract:
Fantastic news! We've Found the answer you've been seeking!
Question:
Consider the issue of mark-to-market value.
Suppose that on January 1st, 2022, you entered the following contract: you committed to buying 15 million Euro on November 1st, 2022 in exchange for 17 million US dollars. On June 1st, 2022 you want to know what the mark-to-market value is of this contract.
1- describe the additional contract you would have to enter into on June 1st 2022 to close out the mentioned contract of January 1st 2022. Be as precise as you can be.
2- What would the prices of the relevant forward exchange have to be for the mark-to-market value of the contract entered on January 1st to be +200,000 US dollars? Show your derivation.
Related Book For
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III
Posted Date: