Given the following information for a 90 day contract: ?

$$\begin{array}{l}
\begin{array} { l c c }
& \text { US Dollars } & \text { FC } \
\text { Value Today } & 3,750 & 5,000 \
\text { Interest Rate } & 4 \% & 7 \% \
3 \text { months interest } & 37.50 & 87.50 \
\text { Value in 3 months } & ? ? & ? ?
\end{array}\
\text { The spot rate today is } 1 \mathrm { FC } = .75
\end{array}$$ What will be the forward rate?

Question

Given the following information for a 90 day contract: ?

$$\begin{array}{l}
\begin{array} { l c c } 
& \text { US Dollars } & \text { FC } \
\text { Value Today } & 3,750 & 5,000 \
\text { Interest Rate } & 4 \% & 7 \% \
3 \text { months interest } & 37.50 & 87.50 \
\text { Value in 3 months } & ? ? & ? ?
\end{array}\
\text { The spot rate today is } 1 \mathrm { FC } = .75
\end{array}$$ What will be the forward rate?

Quizplus · Accepted Answer

To calculate the forward rate, we need to use the formula:
Forward Rate = Spot Rate x (1 + Domestic Interest Rate) / (1 + Foreign Interest Rate) ^ (Days / 360)
Using the given information, we can calculate the forward rate as:
Forward Rate = 0.75 x (1 + 0.03) / (1 + 0.02) ^ (90/360)
Forward Rate = 0.745 US Dollars
Therefore, option C is the correct answer.

Given the Following Information for a 90 Day Contract What Will Be the Forward Rate? A)1FC =

Given the Following Information for a 90 Day Contract What Will Be the Forward Rate?
A)1FC =