QUESTION 3

1. Assume that the foreign currency (F) has been quoted against the as follows :

Spot rate 1: F2256 2266

1: F2307 2322

3 months forward rate

Required:

1. Determine the amount required in sterling pound to buy 1 million foreign currencies
   1. At the spot
   2. In 3 months time under the forward exchange contract.

2. Compute the amount a customer would get if he were to sell 1 million foreign currency
3. 1. At the spot rate
4. 2. In 3 months time under forward exchange contract