fbe436 hw4 solution

The dollar is trading at a forward discount the eur

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Unformatted text preview: emium. The dollar is trading at a forward discount the EUR at a forward premium. The dollar is trading at a forward discount the EUR at a forward discount. We can’t say without additional information. 1 FBE 436 Answers to Problem Set #4 4.4 Assume that the current MXP/$ spot exchange rate is 10 while the corresponding six and twelve month forward rates are 11 and 12. The $ is trading at a a. b. c. d. e. 4.5 forward premium for the six month contract, a discount for the twelve month contract. forward discount for the six month contract, a premium for the twelve month contract. forward discount for both forward contracts. forward premium for both forward contracts. We can’t say without additional information. A US wine producer sells her whole production in Brazil every fall. It is now spring and the price of the next shipment has been fixed in Brazilian Real (BRL). To secure the $ revenue of her next wine shipment she will, a. b. c. d. e. 4.6 Sell BRL forward. Buy BRL forward. Do nothing...
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This note was uploaded on 01/16/2010 for the course FBE 436 at USC.

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