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Your company will receive AUD2,000,000 in 90 days. To convert this amount into USD, you contact...

Your company will receive AUD2,000,000 in 90 days. To convert this amount into USD, you contact a bank to sell AUD forward. Here is the information you got:

90 day forward rate: AUD1 = USD0.85
Today spot rate: AUD1 = USD0.90

After 90 days, market spot rate is AUD1 = USD0.92

90 day Forward rate premium/discount is

_____%

I GOT THIS ANSWER WRONG IT ISN'T 5.56%
I DID IT THIS WAY

Also, I posted this yesterday & ? got the same answer I have.

0.85 - 0.09/0.90 * 100 = -5.5555
= 5.56

Please answer and show what you did so I can see what I did wrong.

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Answer #1


90 day Forward premium on AUD
=(0.85-0.90)/0.90
=-5.56%

90 day Forward premium on USD
=(1/0.85-1/0.90)/(1/0.90)
=5.8824%

The question is not very clear-If the above answer doesnt work as well then may be u need to multiply the answer by 360/90 or 365/90

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