Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On Tuesday morning, an investor takes a long (Buy) position in a India Rupees futures contract that matures on Thursday afternoon. The agreedupon price is

On Tuesday morning, an investor takes a long (Buy) position in a India Rupees futures contract that matures on Thursday afternoon. The agreedupon price is INR 72.5 = 1 USD for USD 84500. At the close of trading on Tuesday, the futures price has risen to INR 72.6 = 1 USD. At Wednesday close, the price falls to to INR 72.55 = 1 USD. At Thursday close, the price falls to INR 72.35 = 1 USD, and the contract matures. The investor takes delivery of the Indian Rupees at the prevailing price of INR 72.35 = 1 USD.

Answer the following 2 questions based on the information given above.

How much will the investor will pay on Wednesday closing price ?

What will be the profit/loss made by the investor on the above contract?

Which of the following option can be an indicator for Appreciation of EUR to OMR?

a.

Spot rate of OMR/EUR is equal to future rate of EUR/OMR

b.

Spot rate of EUR/OMR is equal to future rate of OMR/EUR

c.

Future rate of OMR/EUR is less than Spot rate of OMR/EUR

d.

Future rate of EUR/OMR is greater than spot rate of EUR/OMR

e.

None

The currency value of a country with low return on investment will be _________________

a.

Appreciated

b.

Depreciated

c.

No change in value of currency

d.

Forward premium

The most important difference between futures and forward contracts are based on ______________

a.

Terms of contract

b.

Returns

c.

forex Rates

d.

Protection against fluctuating rates

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting An Introduction

Authors: Atrill Peter, Eddie McLaney

6th Edition

0273771833, 978-0273771838

More Books

Students also viewed these Accounting questions

Question

Why is desire important for success? (p. 271)

Answered: 1 week ago