KNOWLEDGE CHECK Imagine you are a Dutch diamond de aler who sources diamonds from South Africa. It is March 2016. Anew 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. There fore, 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 Blomberg 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? Click to open/close chart Message O"? EUR-ZAR X-RATE Curncy FRD Related Functions Menu D Actions Settings 3 Multi-Currency View FX Forward Calculator 10 Forwards 10 Cross Rates Calculator 13 Par Forwards 13 Predelivery/HER Currencies EUR ZAR Auto Refresh via Pricing Date 08/21/16 Spot Source BGNL * Direct Input Trading Mode Fwd Source CHPL Show True Decimal 3D REO 20 Forward Curve 22 Broken Dates T Dates Points Bid/Ask Forwards Bid/Ask Days Dates Points Bid/Ask Forwards Bid/Ask ON 03/22/16 137.00 140.40 17,086860 17.109120 mm/dd/yy IN 03/23/16 32.80 41.00 17.100900 17.122820 SP 03/23/16 17.1050 17.1261 17,1050 17.1261 SN 03/24/16 38.16 38.76 17.108816 17.129976 IW 03/30/16 267.10 271.30 17.131710 17.153230 2W 04/06/16 528.38 559.02 17.157838 17.182002 3W 04/13/16 789.67 846.75 17.183967 17.210775 IM 04/25/16 1237.58 1339.99 17.228758 17.260099 2M 05/23/16 2275.85 2466.91 17.332585 17,372791 23 Forward Forwards IM1 06/15/16 3237.87 3310.82 17.428787 17.457182 Dates Points Bid/Ask Forwards Bid/Ask 3M 06/23/16 3572.48 3604,36 17.462248 17.486536 IM 04/25/16 17.228758 17.260099 4M 07/25/16 4861.44 4902.61 17.591144 17.616361 06/23/16 2232.49 2366.78 17.452007 17.496777 SH 08/23/16 6029.56 6079.16 17.707956 17.734016 IM2 09/21/16 2197.68 7255,70 17.824768 17.851670 mm/dd/yy 6H 09/23/16 7278.24 7336.84 17.832824 17.859784 mm/dd/yy IM3 12/21/16 11006.62 11149.13 18.205662 18.241013 9M 12/23/16 11090.40 11234.80 18.214010 18.249580 IM03/15/17_14779.86 14921.17 18.582986 18.618217 IY 03/23/17 15139.81 15280.82 18.618981 18.654182. 40 Legend Represents Holiday Zoom 1005 O'? d Calculator EUR 4,717 fewer efresh Input True Decimal ZAR 4,717 fewer wards Bid/Ask ZAR 4,717 more EUR 4,717 more Twards Bid/Ask 28/58 17.260099 -S2007 17.496777 1001