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QUESTION 1. Your company will receive AUD2,000,000 in 90 days. To convert this amount into USD,...

QUESTION 1.
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

If you choose to sell forward, how much USD will you receive?

QUESTION 2.
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

If you choose to sell forward then

A. The amount of USD you received will be determined today and can't be changed
B. The amount of USD you received will be determined today but you can still sell AUD to other bank with better rate
C. The amount of USD you received can't be determined today since you sell AUD in the future
D. The amount of USD you received can't be determined today since the exchange rate is not known yet
E. The amount of USD you received will be determined today and you will adjust that amount periodically.

QUESTION 3.
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?

QUESTION 4. 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

During that 90-day period:

A. AUD depreciates less than 3%
B. AUD depreciates between 3% and 5%
C. AUD depreciates between 5% and 7%
D. AUD appreciates less than 3%
E. AUD appreciates between 3% and 5%
F. AUD appreciates between 5% and 7%
math   Statistics-And-Probability   
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