Reference no: EM13948274
Question 1 : Future contact
Company needs to hedge the foreign exchange rate with future contact to eliminate the risk / loss.
Suppose the spot rate is $ 45
3 month future forward contact $35
6 month future forward contact $33
9 month future forward contact $42
12 month future forward contact $45
Instruction : please show your calculation and brief explanation regarding this future contact.
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Question 2:
You deposit total amount $30,000 with interest rate 3.5%. Current inflation rate is 1.5. What is your real interest rate?
Instruction: [a] Define the difference between nominal interest rate and real interest
[b] calculate the real interest rate and provide a clear calculation and brief
explanation.
[2] You initially invest "PUT" with $10,000 to buy low, if the value increases from $10,000 to $12,000. Will you gain or loss from this investment.
[3] At the same time, you also invest "CALL" with another $15,000 to buy high, if the value increases from $15,000 to $20,000. Will you gain or loss from this investment.
Instruction: Please provide clear information for these questions.
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