1/ Suppose that the spot rate for the euro is $1.4500 and with a forward rate of $1.392.

Which of the following most closely approximates the forward discount of the euro?

-4.0000%

0.0040%

-0.0080%

-0.0120%

2/ Suppose that you are a finance manager at a U.S. based MNC. On January 1st, you anticipate you will need to purchase C$110,000.00 (Canadian dollars) worth of supplies from a Canadian supplier in March using Canadian dollars (C$). The current spot rate for the Canadian dollar is $0.67.

In order to lock in spot rate for this exchange, you purchase a futures contract specifying C$110,000.00 at $0.67 per Canadian dollar with a March 10th settlement date.

On the settlement date, your MNC will need to pay _________(U.S. dollars) for the C$110,000.00.

3/ Suppose that you are a currency speculator, based in the U.S., attempting to capitalize on a possible depreciation of the Canadian dollar (C$). On January 1st, the spot rate for the Canadian dollar is $0.51. This is also the price at which futures contracts for Canadian dollars are being sold. You have C$260,000.00 to use on these positions.

On January 1st, you sell a futures contract specifying C$260,000.00 at $0.51 per Canadian dollar with a March 10th settlement date.

On the settlement date, you will _________ (U.S. dollars) in exchange for the C$260,000.00.