Business, 28.10.2020 16:50 astultz309459

A few months ago, an investor went long a forward contract to purchase EUR 10,000 at a forward price of USD 1.25 per EUR. The contract still has 9 months to maturity. The current 9-month forward price of Euro is USD 1.20 per EUR, and the 9-month interest rate for USD is 3% per annum (continuously compounded). What is the present value of this forward contract to this investor

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Answer from: chloeann5397

488.88

Explanation:

In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed on at the time of conclusion of the contract, making it a type of derivative instrument.

DATA

Interest rate = e = 3%

time = 9 months

F1 = 1,2

F0 = 1.25

euro to purchase = 10,000

The present value of this forward contract to this investor = (F1 - F0) x Euro to be purchased x e-r x t

The present value of this forward contract to this investor = USD (1.20 - 1.25) per Euro x 10,000 x 3% x 9/12

The present value of this forward contract to this investor = USD (1.20 - 1.25) x 10,000 x 3% x 9/12

The present value of this forward contract to this investor = - USD 488.88

Answer from: Quest

1 all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

Answer from: Quest

i would say iii (3) because in order to compare a price you have to use as a reference other near stores because it's its

hope i explained myself

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A few months ago, an investor went long a forward contract to purchase EUR 10,000 at a forward price...

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