Solution-Determine the extension charges payable

Determine the extension charges payable

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Reference no: EM132774952

Question - Suppose you as a banker entered into a forward purchase contract for US$ 50,000 on 5th March with an export customer for 3 months at the rate of ' 59.6000. On the same day you also covered yourself in the market at '60.6025. However on 5th May your customer comes to you and requests extension of the contract to 5thJuly. On this date (5th May) quotation for US$ in the market is as follows:

Spot/ 5th June 59.2300/2425

Spot/ 5thJuly 59.6300/6425

Assuming a margin on buying and selling, determine the extension charges payable by the customer and the new rate quoted to the customer?

Reference no: EM132774952

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Determine the extension charges payable

Reference no: EM132774952

Reference no: EM132774952

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