Question
A bank quotes the following exchange rates. Spot rate USD/MYR = 4.2460 / 4.2850 3-Month swap points: +0.1000 / +0.1500 6-Month swap points: +0.2000 /
A bank quotes the following exchange rates.
Spot rate USD/MYR = 4.2460 / 4.2850
3-Month swap points: +0.1000 / +0.1500
6-Month swap points: +0.2000 / +0.2700
Use these rates to answer the following question
Q-1A customer sells USD 65,000 for MYR spot. How many MYR will she receive?
Q-2 A customer sells MYR 600,000 for USD spot. How many USD will she receive?
Q-3 A Malaysian importer has USD-A/P value at USD 4,000,000 dues in 3 months time. Show how the importer can use FX-forward to hedge the risk? (i.e., show the transaction to undertake and the hedge result)
Q-4 As the bank quotes USD at a forward premium, the Malaysian importer is better off buying USD spot rather than forward (i.e., the spot rate for USD is cheaper than the forward rate). Do you agree with this idea? Discuss
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Cornett
7th Edition
0073530751, 9780073530758
