I believe the spot rate in the 2nd example for the company needing to pay $1m in 3 months time is quoted as £/$ at 1.5123. This would mean £ were weaker than $ in the example so the $993789 should convert to £1502907, please check this.
I am reading £/$ or pounds per dollar, so we get £1.5123 for each $1. This is how it is explained earlier in the lecture.
Best Wishes
Dan
K
kengarrettTutor·
I think we got the rates the wrong way round in the question. It should have said either:
$/ £ 1.5123 or
1£/ $ 1.5123
Thanks for pointing it out.
T
tarora·
The spot rate in the MMH concept (receipts from US customer for $ 5mn) is considered as 1$ = EURO 0.7524 however; it should be 1 EURO = $ 0.7524.
This leads to the actual amount deposited after 3 months in EURO Bank (Home Country) should be EURO 6,595,956.43 instead of EURO 3,734,008.921.
Correct me if I am wrong!?
T
tarora·
I am sorry, for my previous comment.
I understand it now.
The answers in the video are perfectly correct.
K
kengarrettTutor·
Thanks.
J
Jian·
Excellent explanation. Easy to follow. Helps me a lot during my revision.
I believe the spot rate in the 2nd example for the company needing to pay $1m in 3 months time is quoted as £/$ at 1.5123. This would mean £ were weaker than $ in the example so the $993789 should convert to £1502907, please check this.
I am reading £/$ or pounds per dollar, so we get £1.5123 for each $1. This is how it is explained earlier in the lecture.
Best Wishes
Dan
$/ £ 1.5123 or
1£/ $ 1.5123
Thanks for pointing it out.
This leads to the actual amount deposited after 3 months in EURO Bank (Home Country) should be EURO 6,595,956.43 instead of EURO 3,734,008.921.
Correct me if I am wrong!?
I understand it now.
The answers in the video are perfectly correct.