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Dear John,
The spot rate is calculated as 0.7-0.74 ARD/JPY.
I am wondering why 0.7ARD/JPY is used to to calculate the future spot rate instead of 0.74ARD/JPY. I thought the company needs to convert ARD to JPY, the exchange of 0.74 should be used.
Thank you!
LilyYou are right.
For the initial investment they are buying ARD and should have used 0.74. For the later receipts, they will be selling ARD and so for these it is correct to have used 0.7.
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