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1.9612-1.9618 $/Euros
3m forward rate quoted at $0.0012-0.0006 premium in Europe.European company is expecting to receive $2.5m in three months time would like to hedge using forward?
I know we need to divide by 1.9618 since we have to sell dollars, but wat about premium?
In what other ways can the examiner test us on premium and discounts I mean the way they put it out here is 0.0012-0.0006 premium, sometimes I have seen in question +- 0.0008???
Why all the ???????? ?
If the spot rate (or the forward rate) is quoted as (for example) 1.5000 +/- 0.0008,
the it means that the two rates are 1.5000 – 0.0008 = 1.4992, to 1.5000 + 0.0008 = 1.5008
So, 1.4992 – 1.5008It is just a way of giving a quote.
thnk u, I just sensed u were online and I wanted the answer quickly before my power shuts down in my area…………. 🙂
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