Suppose that two counterparties, A and B, enter a three-month forward contract on January 1st, whereby A

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Suppose that two counterparties, A and B, enter a three-month forward contract on January 1st, whereby A buys USD1 million at a forward rate of AUD/USD 1.7662. OnMarch 1st, A decides it no longer needs to buy USD1 million on 31 March, so it enters a one-month forward contract to sell USD1 million on 31 March at a forward rate of AUD/USD 1.8000 from counterparty C. Calculate the net cost to counterparty A, before transaction costs.

Posted Date: May 18, 2024 11:07 AM

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Suppose that two counterparties, A and B, enter a three-month forward contract on January 1st, whereby A

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