A U.S. company has committed to pay 14 million kronor to a Swedish company in one year. What is the cost (in present value) of covering this liability by buying kronor forward? The Swedish interest rate is 1.0%, and exchange rates are shown in Table 28.1 Cost Country Currency Symbol Code Spot Rate 3 Months Forward Rates 6 Months 1 Year Europe Eurozone Euro Czech Republic Koruna Russia Ruble P Sweden Krona Switzerland Franc United Kingdom Pound Americas Brazil Real Canada Dollar $ Mexico Peso $ ENTE AA EUR K CZK 1.1595 22.8420 1.1618 1.1645 1.1690 22.8410 22.8360 22.8310 RUB 70.7987 70.1318 69.4397 68.1211 kr SEK 8.8655 8.8416 8.3886 8.8230 fr CHF 0.9298 0.9274 0.9246 0.9198 GBP 1.2714 1.2756 1.2765 1.2774 R$ BRL 5.1101 5.1273 5.1432 5.1937 CAD 1.3416 1.3413 1.3410 1.3415 MXN 22.2949 22.5591 22.7913 23.2403 Pacific/Middle East/Africa Australia Dollar $ AUD 0.7151 0.7154 0.7154 0.7152 China Yuan CNY 6.9955 542 6.6947 6.7668 India Rupee V INR 74.6035 74.6107 74.6177 74.6328 Japan Yen JPY 107.19 107.06 New Zealand Dollar $ NZD 0.6670 South Africa Rand R ZAR 16.3958 0.6670 16.5488 106.85 0.6669 116.6893 106.55 0.6665 16.9753 South Korea Won W KRW 1,196.03 Turkey Lira TRY 6.8523 1196.17 7.0600 1,195.17 7.3799 1,193.03 8.0233 aRates show the number of units of foreign currency per U.S. dollar, except for the euro, the U.K. pound, and the Australian and New Zealand dollars, which show the number of U.S. dollars per unit of foreign currency. TABLE 28.1 Spot and forward exchange rates, July 2020. Source: CME GROUP