Hyundai motors exports cars to Germany, and every three months, it receives EUR 500,000 from car shipments. On March 1, the exchange rate between the Indian Rupee and Euro is EUR 1= INR 80.7242. The euro interest rate is 6% operandum, while interest rate in India is 9% per annum. Hyundai wants to hedge its euro receipt through forward contract for the next 6 months. The 180-daysforward rate is EUR 1= INR 81.5642.

(A) Calculate 90 days and 180 days theoretical forward rate.

Answer rating: 100% (QA)

To calculate the theoretical forward rate for 90 days and 180 days we can use the interest rate pari... View the full answer