Question
Could you please work through he problem and provide the work as well as solutions The current exchange rate for the Euro is $1.18. The
Could you please work through he problem and provide the work as well as solutions
The current exchange rate for the Euro is $1.18. The 2-year U.S. dollar risk-free rate is 4% and the 2- year Euro risk-free rate is 1%. What is the 2-year forward price for the Euro? All rates in this problem are continuously compounded rates.
1) $1.111 2) $1.253 3) $1.194 4) $1.180
The 1-year zero rate is 4.25%. The 2-year zero rate is 5.5%. What is the forward rate for a loan made 1 year from now to be repaid in 2 years (1 year after the loan is made)? All rates in the problem are continuously compounded rates.
1) 6.75% 2) 5.25% 3) 5.50% 4) 4.875%
It is currently December 31, 2015. Three years ago (December 31, 2012) you entered into a forward rate agreement to lend $10 million in 5 years (loan to be made on December 31, 2017) for 4 years (loan to be repaid on December 31, 2021) for a rate of 3.2%. Today, the 2-year zero rate is 2.1% and the forward rate for a loan to be made in 2 years (December 31, 2017) and to be repaid 4 years after the loan is made (December 31, 2021) is 4.5%. What is the value of the forward rate agreement today? All rates in this problem are continuously compounded rates. Round your answer to the nearest dollar. Due to rounding, your answer may not be exactly the same as the correct answer choice. Yur answer should be within $10 of the correct answer choice.
1) $493,812 2) $38,914 3) -$5,832 4) -$485,870
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