(a) Lilith Corporation, a MNC based in New York will need 1 million Brunei Dollars (BND) in 90 days to purchase Brunei imports. It can buy the BND for immediate delivery at spot rate of S(USD/BND) = 1.5000 or it could wait 90 days and then exchange USD for BND at the spot rate existing at that time, but Lilith Corporation will not know what the rate will be.

i. Calculate the USD amount that Lilith Corporation needs to exchange based on the current spot rate.

ii. Assume that Lilith Corporation negotiated a 90-days forward rate of F90 (USD/BND) = 1.5000, calculate the profit / (loss) should the 90-days days spot position equal to S90 (USD/BND) = 1.6700.

iii. Assume that Lilith Corporation negotiated a 90-days forward rate of F90 (USD/BND) = 1.5000, calculate the profit / (loss) should the 90-days spot position equal to S90 (USD/BND) = 1.4300.

(b) Equizuo Corporation and Mithril Corporation has entered into a 5 year currency swap for $2 million. Equizuo Corporation is a US-based MNE and Mithril Corporation is a EURbased MNE. The spot exchange rate is S ( / $) = 1.25.

Calculate the following:

i. Interest amount that each firm need to serve at the end of the year given that US interest rate is 4.7 percent and EUR interest rate is 5.2 percent.

ii. Given the exchange rate after 1 year is S ( / $) = 1.27, calculate the amount that Equizuo Corporation and Mithril Corporation need to pay in dollar term.