On 1 nov 2000 the spot price of us dollar was 15265 and, Ask an Expert

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On 1 Nov 2000, the spot price of US dollar was 1.5265 and three year forward price was 1.5020 in canadian dollars. suppose that on that date, the ontario government negotiated a deal to sell property that it owns in new york city: the sale would take place in 3 years(1 Nov 2003) for a payment of 20 million us dollar. suppose that ontario goverment would like to determine today the canadian dollars it would receive in three years from this sale. it considers using either a foward or synethetic contract.

a) determine the canadian dollars that it would receive under a forward contract

b) outline the combination of borrowing, depositing and currency transations on the spot market by which the ontario goverment could devise a synthetic forward contract.

c) give the measured difference in the forward and synthetic forward price of us dollars, what changes in interest rates and spot exchange rate may expect?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9880793

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