Question
Country In US $ UK Pound 2.0000 1-mos forward 2.0100 3-mos forward 2.0200 6-mos forward 2.0300 Euro 1.5000 1-mos forward 1.5100 3-mos forward 1.5200 6-mos
| Country | In US $ |
| UK Pound | 2.0000 |
| 1-mos forward | 2.0100 |
| 3-mos forward | 2.0200 |
| 6-mos forward | 2.0300 |
| Euro | 1.5000 |
| 1-mos forward | 1.5100 |
| 3-mos forward | 1.5200 |
| 6-mos forward | 1.5300 |
| 6-mos forward | 1.5300 |
1. What is the 3-month forward cross-exchange rate between pounds and euro F3(/)?
2. ABC Company, which is a U.S. firm, sells merchandise today to a French company for 100,000, the account is payable in one months, and the firm wants to hedge against the unfavorable future exchange rate with forward contact, what transaction does it need to take? What is the amount of dollar payment received in one month?
3. Suppose ABC Company also has to pay 100,000 to its supplier in one month, what transaction does it need to take in order to hedge against unfavorable future exchange rate? What is the amount of dollar payment made in one month?
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