Question
JP Morgan Chase writes a forward contract to sell 10 million pounds sterling at the delivery price of $1.6247 per pound in 30 days time.
JP Morgan Chase writes a forward contract to sell 10 million pounds sterling at the delivery price of $1.6247 per pound in 30 days time. At the end of the contract the spot exchange rate was $1.65 per pound. What was the profit to JP Morgan Chase?
The current spot price of a non-dividend paying stock is $65, while the simple interest rate is 4.50 percent per year. Consider a forward contract written on this stock with a maturity of 90 days. a) Calculate the forward price. b) What is the value of the contract? c) General Electric wants a 90-day forward contract with the delivery price set at $60. What is the value of this contract?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started