Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / On 1st January 2021 a British exporter sells GBP420 Million of cars' accessories to an Ita...

On 1st January 2021 a British exporter sells GBP420 Million of cars' accessories to an Italian firm. The importer is sent an invoice for EUR453.6 Million payable in 4 months' time. The spot rate of

On 1st January 2021 a British exporter sells GBP420 Million of cars' accessories to an Italian firm. The importer is sent an invoice for EUR453.6 Million payable in 4 months' time. The spot rate of exchange between the British Pound and Euros is EUR 1.08 = GBP 1.00. Required: a) If the spot rate of exchange in 4 months is EUR 1.10 = GBP 1.00. What exchange rate gain or loss will be made by the British exporter? [3 marks] b) A four month forward is available at EUR 1.07 = GBP 1.00. Show how risk can be reduced using the forward. [3 marks] c) Explain the chief differences between direct and indirect quotes for foreign exchange transactions.

Apr 14 2021 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions