The current euro exchange rate is 51.10 (dollar price of euro). Assume zero interest rates for...

Question

Question

Answer 1

Answer #1

The current value of forward contract is the

Spot price of asset - Present value of forward price

Spot price = 1.10

PV of forward price = 1.10/(1+0%)^2

PV = 1.10 ( Since interest is 0%)

Current value of forward contract = 1.10 - 1.10= 0

Answer 2

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