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Consider the following quotes for USD/SGD (amount of SGD per 1 USD) spot and forward premia from a foreign exchange dealer.

Spot rate: 1.4050-1.4065

6 month forward premium: 2.80%

As an importer, you want to hedge your 1-year foreign exchange exposure by selling the USD forward. Apply the theories of exchange rate determination to find out the USD/SGD forward exchange rate that the dealer will bid you.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92095017

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