Question
Victoria Exports (Canada). A Canadian exporter, Victoria Exports, will be receiving six payments of 14,000, ranging from now to 12 months in the future.
Victoria Exports (Canada). A Canadian exporter, Victoria Exports, will be receiving six payments of 14,000, ranging from now to 12 months in the future. Since the company keeps cash balances in both Canadian dollars and US dollars, it can choose which currency to exchange the euros for at the end of the various periods. Which currency appears to offer the better rates in the forward market? (Click on the loon to import the table into a spreadsheet) Period Days Forward Csieuro US$/euro spot 1.3331 1.3244 1 month 30 1.3359 1.3247 2 months 00 1.3381 1.3250 3 months 90 13406 1.3255 6 months 180 1.3432 1.3259 12 months 360 1.3450 1.3281 Calculate the forward premium, the Canadian dollar proceeds, and the difference from the spot rate proceeds in the CS/Euro forward market below: (Round the forward premium to three decimal places and the Canadian dollar amounts to the nearest cent.) Period Days Forward Forward Premium C$/euro on the CS/euro Spot 0 1.3331 C$ Proceeds of Difference 14,000 Over Spot CS
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