2. The following data are taken from the financial market pages of an Australian newspaper Forward Margins Forward Margins (Buy AS/Sell AS) 0/1 Forward Cortract 1 month 2 month 3 month 6 month I year 2 years 3 years 1/2 1/3 2/4 0/1 -16/-8 51/-11 The data under the "Forward Margins" column represent the forward contracts for the US dollar with respeet to the Australian dollar (given in points form). (a) Using this data, and the bid-ask for spot USD at 0.7144 to 0.7145, compute the outright bid'ask rates for the following forward contracts: (i) 1 month (ii) 6 month (iii) 2 years (iv) 3 years (b) Calculate the forward premium for the following contracts: (i) 2 month (ii) 3 month (iii) 6 month (iv) 1 year Is:
2. The following data are taken from the financial market pages of an Australian newspaper Forward Margins Forward Margins (Buy AS/Sell AS) 0/1 Forward Cortract 1 month 2 month 3 month 6 month I year 2 years 3 years 1/2 1/3 2/4 0/1 -16/-8 51/-11 The data under the "Forward Margins" column represent the forward contracts for the US dollar with respeet to the Australian dollar (given in points form). (a) Using this data, and the bid-ask for spot USD at 0.7144 to 0.7145, compute the outright bid'ask rates for the following forward contracts: (i) 1 month (ii) 6 month (iii) 2 years (iv) 3 years (b) Calculate the forward premium for the following contracts: (i) 2 month (ii) 3 month (iii) 6 month (iv) 1 year Is:
Chapter4: Exchange Rate Determination
Section: Chapter Questions
Problem 1BIC
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Transcribed Image Text:2. The following data are taken from the financial market pages of an Australian newspaper
Forward Margins
Forward Margins (Buy AS/Sell AS)
0/1
Forward Cortract
1 month
2 month
3 month
6 month
I year
2 years
3 years
1/2
1/3
2/4
0/1
-16/-8
51/-11
The data under the "Forward Margins" column represent the forward contracts for the US
dollar with respeet to the Australian dollar (given in points form).
(a) Using this data, and the bid-ask for spot USD at 0.7144 to 0.7145, compute the outright
bid'ask rates for the following forward contracts:
(i) 1 month
(ii) 6 month
(iii) 2 years
(iv) 3 years
(b) Calculate the forward premium for the following contracts:
(i) 2 month
(ii) 3 month
(iii) 6 month
(iv) 1 year
Is:
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