A company enters into a forward contract with a bank to sell a foreign currency for K

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A company enters into a forward contract with a bank to sell a foreign currency for K\ at time Tj.

The exchange rate at time 7\ proves to be S\ (> K]). The company asks the bank if it can roll the contract forward until time T2 (> Ti) rather than settle at time Tj. The bank agrees to a new delivery price, K2. Explain how K2 should be calculated.

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Options Futures And Other Derivatives

ISBN: 9780130090560

5th Edition

Authors: John C. Hull

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Question Posted: Oct 18, 2024 07:01 AM

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A company enters into a forward contract with a bank to sell a foreign currency for K

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