KNOWLEDGE CHECK EUR 4,717 more ZAR 4,717 more Imagine you are a Dutch diamond dealer who sources diamonds from South Africa. It is March 2016. A new mine is being dug in South Africa and you have agreed with the miner to buy one million South African rands' worth of diamonds a year from today. Therefore, you will need one million rands in cash in one year's time. The miner wants you to demonstrate your commitment by either giving him a million rands now or proving that you have an FX forward contract for the full amount. Currently, the exchange rate is 17.1 rands to the euro. You check the forward rates on offer on the Bloomberg FRD function. You have two options. Exchange euros today at today's exchange rate to pay him one million rands now, or lock in a forward agreement to convert euros to one million rands in one year's time and share the forward agreement with him. If you were to do the forward instead of exchanging euros for rands today, approximately how much more or less would you end up with in a year? ZAR 4,717 fewer EUR 4,717 fewer Click to open/close chart CF KNOWLEDGE CHECK EUR 4,717 more ZAR 4,717 more Imagine you are a Dutch diamond dealer who sources diamonds from South Africa. It is March 2016. A new mine is being dug in South Africa and you have agreed with the miner to buy one million South African rands' worth of diamonds a year from today. Therefore, you will need one million rands in cash in one year's time. The miner wants you to demonstrate your commitment by either giving him a million rands now or proving that you have an FX forward contract for the full amount. Currently, the exchange rate is 17.1 rands to the euro. You check the forward rates on offer on the Bloomberg FRD function. You have two options. Exchange euros today at today's exchange rate to pay him one million rands now, or lock in a forward agreement to convert euros to one million rands in one year's time and share the forward agreement with him. If you were to do the forward instead of exchanging euros for rands today, approximately how much more or less would you end up with in a year? ZAR 4,717 fewer EUR 4,717 fewer Click to open/close chart CF