### Better sign a forward contract today also not sign a forward

Assignment Help Macroeconomics
##### Reference no: EM1332655

Calculating Forward contract value for foreign Exchange

Today spot rate £ 1 = US \$ 2
3-month forward rate £ 1 = US \$ 2.10
After 3-month spot rate £ 1 = US \$ 2.20

US importer needs £ 1million payment 3-months later, and he sign a forward contract today

a. How much (US\$) does the importer need to pay after 3 months?
b. How much is the cost of hedge?
c. Better sign a forward contract today or not sign a forward contract today? Why?

### Write a Review

#### The equivalent uniform yearly cost per machine

The equivalent uniform yearly cost per machine (years 1-5) at an interest rate of 8% per year is.

#### Production possibilities curve for medical services

Draw a bowed-out production possibilities curve (PPC or PPF) with an aggregate measure of medical services, Q, on the horizontal axis and an aggregate measure of all other goods (and services), Z, on the vertical axis.

#### Calculate the international supply and consumer surplus

Compute the producer surplus from parts a and b. Are producers better or worse off as a result of international trade? Discuss why.

#### Price discrimination strategy of united airlines

Price Discrimination: Assume that United Airlines knows that it faces the following demand equations and corresponding marginal revenue equations for its (one-way) SFO to Las Vegas route

#### Questions about expansionary monetary policy

In the country A, all wage contracts are indexed to inflation.  That is, each month wages are adjusted to reflect increases in cost of living as reflected in changes in price level.  Explain answer with aggregate supply and aggregate demand curves.

#### Examine the statement by game theory

When McDonalds Corp reduced its price of the big mac by 75 percent-Using your knowledge of game theory, what do you think disrupted McDonald's plan?

#### Calculate price-quantity and deadweight loss

Dana's Doorsteps (DD) is a monopolist in the doorstep industry. Its cost is C= 10Q and demand is P = 30- Q.

#### Illustrate what is your forecast of the future value

Illustrate what is your forecast of the future value of the domestic currency. Explain.

#### A severe drought has make a shortage of tomatoes.

A severe drought has make a shortage of tomatoes. Jim makes his own barbeque sauce. One of the main ingredients of his sauce is fresh tomatoes.

Using the theory of oligopoly and the concept of prisoners dilemma, explain why the cigarette companies did not cut on advertising on their own to increase their profits before the law went into effect?

#### Explain how much control might an organization

Explain how much control might an organization have over pricing based on a product's elasticity

#### Elucidate the percentage rate of full employment

Elucidate the percentage rate of Full Employment and Inflation that that these two organizations try to keep as its target.