A bank enters into a forward purchase TT covering an export bill for Swiss Francs 1,00,000at * 32.4000 due 25th April and covered itself for same delivery in the local interbank marketat * 32.4200. However, on 25th March, exporter sought for cancellation of the contract as thetenor of the bill is changed.In Singapore market, Swiss Francs were quoted against dollars as under:USD 1 = Sw. Fcs. 1.5076/1.5120SpotOne month forwardTwo months forwardThree months forward1.5150/ 1.51601.5250 / 1.52701.5415/ 1.5445and in the interbank market US dollars were quoted as under:SpotUSD 1=49.4302/4455Spot / April4100/4200Spot/May4300/4400Spot/June4500/4600Calculate the cancellation charges, payable by the customer if exchange margin required bythe bank is 0.10% on buying and selling.

First the contract will be cancelled at TT selling rate :USD/ Rupee spot selling rate…

Answered: A bank enters into a forward purchase…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Mansukh

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