Hi,
I’m trying to reconcile the formula (FPT-FP)xcontract size and the following question/subsequent answer.
What am I missing here?
Six months ago a dealer sold CHF 1MM forwards against the GBP for 180 day term at a rate of 1.485 (CHF/GBP). The current spot rate for the CHF/GBP is 1.4939/1.4941. Calculate the cash flow the dealer will realize on the settlement date.
The official answer does not use this formula remotely and I just wanted to know how you would tackle this?
Answer is inflow of GBP 4,057 btw.
Thanks
P