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QUESTION 6 Assume ABC expects to receive 2 0 , 0 0 0 , 0 0 0 in 9 0 days. A dealer provides a
QUESTION
Assume ABC expects to receive in days. A dealer provides a quote of $ for a currency forward contract to expire in days. Suppose
that at the end of days, the underlying currency's exchange rate is $ Assume that settlement is in cash.
At expiration, what is ABC's payoff? Hint: is this a Long, or a Short? Think about the actions by the long vs short in the context of foreign currencies. The long
pays... gets...; the short pays... gets....
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