The following table shows the midmarket (i.e., average of the bid and offer) for the current YEN/GBP spot exchange rate as well as for GBP and YEN 270-day LIBOR (annualized): Spot (YEN/GBP) 270-day LIBOR (GBP) 270-DAY LIBOR (YEN) 1.2089 5.25% 1.25% 1. What is the forward premium or discount for a 270-day forward contract for YEN/GBP?

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A: Given: Spot rate =$0.03112/LC3 month forward =$0.03117/LC

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Q: None

A: Step 1: Calculate the Mid-Rate Quotes The mid-rate is the average of the bid and ask rates for each…

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Q: Dealer A quotes 15.2500–15.2550 for the ZAR/EUR exchange rate to dealer B. The price (in ZAR) at…

A: Solution- ZAR=15.2500 EUR=15.2550 ZAR/EUR=15.2500/15.2550 EUR/ZAR=1/15.2550/1/15.2500…

Q: Spot rate €1.2562/£; 1 month forward €1.2662/£ Which of the two currencies is trading at forward…

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Q: The following current rates have been observed: Spot exchange rate: $1.25/SFr Expected future spot…

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A: Gain or loss = Contract value * ( Forward rate - Spot rate )

Q: The current five‑year Euro yen and Eurodollar rates are 8% and 12.5% per year, respectively. What is…

A: Implied premium = (1+EURO Dollar)5/(1+EURO Yen)5-1

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Q: e SF/$ 180-day forward exchange rate is SF1.30/$ and the 180-day forward premium is 8 percent. What…

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Q: If the 4 month forward exchange rate is €:$= 1.2500 and the spot rate is €:$ = 1.2800, culate the…

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: Suppose you are a customer in the FX market and observe the following quotes for FX spot trades of…

A: Here,

Q: Tyson Inc. is entering into a 3-year pay-euros and receive-dollars cross currency swap. The 3-year…

A: Tyson will receive dollars at 2.28% and will pay 1.89% euros.

Q: Japanese Yen Forward. Use the following spot and forward bid-ask rates for the Japanese yen/U.S.…

A: The mid-rate quote is the average of the bid and ask rates. It can be calculated using the formula:…

Q: Consider this (incomplete) table of FX cross-rates USD EUR JPY GBP CHF CHF Column JPY USD EUR JPY…

A: Row = CHFColumn = JPYMeans CHF per JYP 1 CHF = 96.00 JYPExchange rate = 96.00 JYP per CFH

Q: 1)  Assume the following exchange rates are indirect quotes, what are the equivalent direct quotes…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: The Wall Street Journal reported the following spot and forward rates for the Swiss franc ($ per…

A: Introduction:Spot rates: These rates are used when buying or selling currencies on the spot…

Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.