XYZ Ltd has completed a sale to a German firm and the receivale is denominated in Euro. The receivable is 90 million Euro to be received in 90 days. The following rates exist: $/EUR Spot 1.41 30 day 1.43 60 day 1.44 90 day 1.45 The proceeds from a forward contract would be?
$130,500,000?
90 x 1.45 = 130.5 M ($)
that’s what I thought, but the answer is given as 90,000,000/1.45 = $6.9 million Got to be an error in the question?
where is this Q from?
Can’t tell you or I’ll have to kill you It’s some past Vol 1 practice exams a colleauge gave me, sans errata.
$6.9 million shall be wrong
Yeah, agreed. Talk about a basic mistake.