Imagine that you went long in a 90-day forward contract on €250,000 at $1.1943/€.

Thirty days later interest rates (per annum) are i_$ = 3.5%, i_£ = 4.5%, and i_€ = 5.5% while spot exchange rates are now S₀($/€) = $1.25/€ and S₀($/£) = $1.50/£. Within $1, what is the value today of your position in the forward contract?

Answer rating: 100% (QA)

To calculate the value today of your position in the forward contract we need to determine the prese... View the full answer