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Three months ago, you have entered into a one-year forward purchase of CAD 1,000,000 at a forward rate of EUR/CAD 1.5000. Today, you receive the
Three months ago, you have entered into a one-year forward purchase of CAD 1,000,000 at a forward rate of EUR/CAD 1.5000. Today, you receive the following information from your FX dealer. Bid Ask 1.5110 1.5120 EUR/CAD Spot 9-month Swap Rates 100 110 The CAD interest rate is 3.25% p.a. and the EUR interest rate is 2.05% p.a. (a) Calculate the outright forward rate of EUR/CAD. (2 marks) (b) If you want to take profit, how will you close out the position today? (2 marks) (c) When the position is closed, what will be your profit
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