Forward rate: John Travers is planning a holiday to Thailand but is concerned that the U.S. dollar will decline in value before he makes his trip. His travel agent has planned a trip for him for a total cost of 41,250 Thai baht. John plans to purchase the bahts forward and is given a dollar estimate of $1,247.17 based on the 30-day forward quote. What is the forward rate?

Question

Quizplus · Accepted Answer

The forward rate is the exchange rate agreed upon today for a transaction that will occur at a specified future date. In this case, John Travers wants to secure a 30-day forward exchange rate to purchase Thai baht for his upcoming trip.

We're given that John plans to purchase 41,250 Thai baht and that he's been quoted $1,247.17 for a 30-day forward exchange rate. To calculate the forward rate, we need to divide the number of baht by the number of dollars:

Forward rate = 41,250 baht / $1,247.17 = 33.0785 baht/dollar

Therefore, the answer is B: THB33.0785/$.

Forward Rate: John Travers Is Planning a Holiday to Thailand