Given that: Spot rate 1 month forward 3 month forward 1/$1.6365-1.6385 0.005 0.0047 0.0003 -0.005 1884]....

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Given that: Spot rate 1 month forward 3 month forward £1/$1.6365-1.6385 0.005 0.0047 0.0003 -0.005 1884]. Required: Compute the cost of the forward cover to a customer who; i) Buys pounds one month forward ii) Sells pounds one month forward iii) Buys pounds three month forward iv) Sells pounds three month forward Given that: Spot rate 1 month forward 3 month forward £1/$1.6365-1.6385 0.005 0.0047 0.0003 -0.005 1884]. Required: Compute the cost of the forward cover to a customer who; i) Buys pounds one month forward ii) Sells pounds one month forward iii) Buys pounds three month forward iv) Sells pounds three month forward

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To calculate the cost of the forward cover for each scenario we need to first understand the basic concept of a forward contract A forward contract is an agreement between two parties to exchange an a... View the full answer