Question
Assume that rEUR= 10%, rUSD= 3%and X0USD/EUR= 1.32. You want a long forward position in EUR 210,000 1-Year forward, i.e. receive EUR one year in
Assume that rEUR= 10%, rUSD= 3%and X0USD/EUR= 1.32. You want a long forward position in EUR 210,000 1-Year forward, i.e. receive EUR one year in the future. Your banker quotes you the following USD/EUR forward rate: F1USD/EUR= 1.22. Which choice is more favorable, the actual forward contract or set up a synthetic forward position?
Group of answer choices
Makes no difference
Synthetic forward
Do not have enough information to answer question
Actual forward
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Personal Financial Planning
Authors: Lewis J. Altfest
2nd edition
1259277186, 978-1259277184
