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Set up a synthetic forward position

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Assume that rEUR = 10%, rUSD = 3% and X0USD/EUR = 1.32. You want a long forward position in EUR 210,000 1-Year forward, i.e. receive EUR one year in the future. Your banker quotes you the following USD/EUR forward rate: F1USD/EUR = 1.22. Which choice is more favorable, the actual forward contract or set up a synthetic forward position?

Reference no: EM132674802

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