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Foreign exchange option for the rand-won exchange

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An importer located in South Africa plans to make a payment to a Korean exporter in 1 years' time of 225,000,000 Won for a shipment of cars from Korea. Unfortunately, there is no foreign exchange option for the Rand-Won exchange and the importer cannot readily find someone to take the other side of a forward contact.

The importer observes that:

-The US dollar is currently trading at 14 South African Rand.
-The US dollar is currently trading at 1120 Won.
-A bank in Korea posts an annual interest rate of 12.50% on all deposits and loans.
-A bank in South Africa posts an annual interest rate of 25% on all deposits and loans.Using the two banks and the current spot rates, the importer is assured of paying ____ Rand for her imports

Reference no: EM132953782

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