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3 months ago, you bought 2,000,000 1-year forward at the forward rate of 1.23 $/. If current 9-month interest rates are 7% p.a. in the
3 months ago, you bought 2,000,000 1-year forward at the forward rate of 1.23 $/. If current 9-month interest rates are 7%p.a.in the U.S. and 4%p.a.in the Eurozone, and the current spot exchange rate for euros is 1.18 $/, then how much is your forward contract worth right now? If the forward contract were terminated today, would you expect to have to pay or receive this amount?
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