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Determine the us denominated risk-free interest rate

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The current (spot) exchange rate between US Dollars and Omani Rial is 2.60 US$/Omani Rial. The nine-month forward price for the exchange rate is 2.56 US$/Omani Rial. The

Omani Rial risk-free interest rate is 3.36%.

a. Determine the US$ denominated risk-free interest rate.

b. Professor Gecko enters into 1,000 long forward contracts on the exchange rate (US$/Omani Rial).

If the actual exchange rate at the end of nine month is 2.34 US$/Omani Rial, what is the amount of profit Professor Gecko receives at that time?

Reference no: EM133000532

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