Knowee
Questions
Features
Study Tools

What would be 3-months forward quote on USD/YEN if the spot rate is USD/YEN 114.35. Base currency interest rate per annum is 2%, whereas terms currency interest rate is 6% per annum.Question 9Select one:a.115.4878b.113.2234c.115.4723d.115.4778

Question

What would be 3-months forward quote on USD/YEN if the spot rate is USD/YEN 114.35. Base currency interest rate per annum is 2%, whereas terms currency interest rate is 6% per annum.Question 9Select one:a.115.4878b.113.2234c.115.4723d.115.4778

🧐 Not the exact question you are looking for?Go ask a question

Solution

To calculate the 3-month forward quote on USD/YEN, we can use the formula for forward exchange rate:

Forward Rate = Spot Rate x (1 + (Interest Rate of Base Currency - Interest Rate of Terms Currency) x (Time in years))

Given: Spot Rate = 114.35 Interest Rate of Base Currency (USD) = 2% = 0.02 Interest Rate of Terms Currency (YEN) = 6% = 0.06 Time = 3 months = 0.25 years

Substituting these values into the formula:

Forward Rate = 114.35 x (1 + (0.02 - 0.06) x 0.25)

Solving the equation:

Forward Rate = 114.35 x (1 - 0.01)

Forward Rate = 113.30

So, the closest answer is b. 113.2234.

This problem has been solved

Similar Questions

18.There are two countries, country A and country B, the 3-month interest rate in country A is 3.21% and the 3month interest rate in country B is 3.62%. The current exchange rate A/B is 1.2759. (Assume 90 days for the 3-month period and 360 days in a year) a)Calculate the 3-month forward exchange rate:b) If an exporter from country A was able to lock in a forward quotation to convert their $640000 foreign currency proceeds into local currency, how much would they receive?

A bank has to submit a quote to a customer for buying Euro against Rupees. Thecustomer will have the option of taking delivery any time during the second month. Given thefollowing spot and forward rates, what rate should it quote? EUR/INRUSD/INR Spot : 55.20/55.30One month forward : 15/25Two month forward : 20/30EUR/USD Spot : 1.21/1.22One month forward : 15/10Two month forward : 20/15

A bank has to quote a rate to its customer for purchase of a demand export bill withtransit period of 15 days. The interbank spot rate is Rs. 55.60 / $ and the one month forwardrate is Rs 56.00 / $. If the exchange margin charged by the bank is 0.1% what rate should thebank quote?

What would be the forward rate if the Forward Exchange Contract is quoted as AUD/USD0.8040-50 10:14 Question 4Select one:a.AUD/USD0.8026-40b.AUD/USD0.8064-50c.AUD/USD0.8050-64 d.AUD/USD0.8040-26

Calculate the current exchange rate GBP/JPY, given these two quotes:USD/JPY 114.20-30GBP/USD 1.6750-60Question 3Select one:a.GBP/JPY 190.71-88b.GBP/JPY 191.29-57c.GBP/JPY 191.40-45d.GBP/JPY 192.07-24

1/3

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.