SPOT AND FORWARD RATES
Arvin Australian Imports has agreed to purchase 10,000 cases of Australian wine for 4 million Australian dollars at today's spot rate. The firm's financial manager, Sarah Vintnor, has noted the following current spot and forward rates:
U.S. Dollar/Australian Dollar |
Australian Dollar/U.S. Dollar |
|
Spot | 0.7654 | 1.3065 |
30-day forward | 0.7634 | 1.3099 |
90-day forward | 0.7622 | 1.3120 |
180-day forward | 0.7599 | 1.3160 |
On the same day, Vintnor agrees to purchase 10,000 more cases of wine in 3 months at the same price of 4 million Australian dollars.
a. Spot Rate =
1Aus$= .7654 US$
So 4Mn Aus $ = 4*.7654 = 3.0616Mn US$ Payment to be made.
b. 90 Day Fwd Rate =
1Aus$= .7622 US$
So 4Mn Aus $ = 4*.7622 = 3.0488 MN US$ Payment to be made.
c.
b. 90 Day Fwd Rate =
1Aus$= 1/1.2405 = .8061 US$
So 4Mn Aus $ = 4*.8061 = 3.2244 Mn US$ Payment to be made.
SPOT AND FORWARD RATES Arvin Australian Imports has agreed to purchase 10,000 cases of Australian wine...
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