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What is the current value of the currency futures contract

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Reference no: EM132864381

Question - Three months back, a six-month currency futures contract for the Euro (against the dollar) was issued at a futures price of 1.1. The current spot exchange rate for the Euro (against the dollar) is 1.2. The current 3-month US Treasury rate is 2% and the current riskless rate for a 3-month Euro deposit is 1%. Both rates are on an annual basis with continuous compounding. What is the current value of the currency futures contract?

(a) $0.1025

(b) $0.0925

(c) $0.0975

(d) $0.1075

(e) None of the above

Reference no: EM132864381

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