Which of the following is correct if you have contracted to purchase 1,000 Swiss Francs three months forward at a rate of Sf1.6/$?
A)You pay approximately $625 today for the Francs
B)You pay $1,600 today for the Francs
C)You pay approximately $625 three months from now for the Francs
D)You pay $1,600 three months from now for the Francs

Question

Quizplus · Accepted Answer

Since you have contracted to purchase 1,000 Swiss Francs three months forward at a rate of SF1.6/$, you do not have to pay anything today. You will pay for the Francs three months from now. The cost in dollars will be approximately $625, calculated as 1,000 SF divided by 1.6.

Which of the Following Is Correct If You Have Contracted