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Question 1 :  Future contact

Company needs to hedge the foreign exchange rate with future contact to eliminate the risk / loss. 

Suppose  the  spot rate is $ 45

                3 month future forward contact  $35
                6 month future forward contact  $33
                9 month future forward contact  $42
                12 month future forward contact  $45

Instruction : please show your calculation and brief explanation regarding this future contact. 

---------------------------------------------------------------------------------------------------------------------

Question 2:

You deposit total amount $30,000 with  interest rate 3.5%.  Current inflation rate is 1.5.  What is your real interest rate?

Instruction:  [a] Define the difference between nominal interest rate and real interest
                       [b] calculate the real interest rate and provide a clear calculation and brief
                         explanation. 

[2] You initially invest "PUT" with $10,000 to buy low, if the value increases from $10,000 to $12,000.  Will you gain or loss from this investment. 

[3] At the same time, you also invest "CALL" with another $15,000 to buy high, if the value increases from $15,000 to $20,000.  Will you gain or loss from this investment.

Instruction: Please provide clear information for these questions.  

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91619124
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