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When we approach banks to buy forward contracts .. do they charge any fee for this service ..how do they make profit?
And the future rates are decided by the banks only.. so they can show the rate at which they will make highest profit ( and not the real rate they have speculated!)
How do we trust banks on the future rates speculated by them.
Just for knowledge
ThanksI have’nt watched your lecture 4 before i posted the above question. Now i got the answer that banks make profits by buying foreign currency in large amount and giving it customers who want forward contracts and they determine exchange rates by considering what interest rates they have to pay for the foreign currency they borrowed.
Thank you sir
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