Find currency trader profit-loss from their forward contract

Assignment Help Financial Management
Reference no: EM131532410

A currency trader believes the pound will appreciate relative to the dollar in three months. The current spot rate for pounds is $1.075/£ and the three month forward rate is $1.088/£. The currency trader agrees to enter into a three month forward contract with 25 million pounds attached. The spot rate is £.995/$ on the day the forward contract expires.

Find the currency trader’s profit/loss (in USD) from their forward contract. Round intermediate steps to four decimals and your final answer to two decimals. Do not use currency symbols or words when entering your response.

Reference no: EM131532410

Questions Cloud

What is its times-interest-earned ratio : Its basic earning power (BEP) ratio is 17%, and its return on assets (ROA) is 5%. What is its times-interest-earned (TIE) ratio?
Explain the theory of optimal capital structure : Explain the theory of optimal capital structure (trade off theory). What is the behavioral challenge in achieving efficiency?
Mitigate its exchange rate risk : ABC (British firm) has a plant in Mexico. What will ABC do to mitigate its exchange rate risk?
Spot rate on the day that the forward contract expires : A forward contract forces its seller to sell the underlying asset at the spot rate on the day that the forward contract expires.
Find currency trader profit-loss from their forward contract : A currency trader believes pound will appreciate relative to dollar in three months. Find currency trader’s profit/loss (in USD) from their forward contract.
What is the firm current equity beta-current debt beta : You are an analyst doing research on Continental Resources (ticker CLR), an oil driller. What is the firm’s current equity beta? What is the firm’s current debt
Call options and three-month puts on stock : It is possible to buy three-month call options and three-month puts on stock Q. Both options have an exercise price of $61 and both are worth $11.
Assume that the stock options are european options : Assume that the stock options are European options. How much would you be willing to pay for a put on this stock with the same maturity and exercise price?
Calculate the value of put if it had been european-style : Calculate the value of the Buffelhead American put. Calculate the value of the put if it had been European-style.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd