Change from day previous 00032 00034 037 1 5 points See the

Change ( from day previous). 0.0032 +0.0034 -0.37 1. 5 points. See the exchange rate information above. Some currencies are quoted in USD, some per Spot XR 6 mos. Fwo 1.3112 1.3292 110.5147 currency 1.3155 CAD (per SUS) UK pound (in SUS) 1.3180 Jap. yen (per SUS)110.53 USD. The \"change\" is from the previous day. Indicate for each currency whether it appreciated or depreciated from the day previous. Calculate the change in the USD value of 12 million units of each currency above from the day previous. For each currency above, indicate whether the currency is trading at a forward premium or a forward discount. a) b) c) Focus

Solution

Currency Spot XR Change 6 Month Forward a) Appreciation/depreciation b) Change = (Spot XR + Change ) - Spot XR) x 12Million units c) forward Premium / discount CAD 1.3155 -0.0032 1.3112 Appreciated -$38,400.00 Forward Premium UK Pound 1.318 0.0034 1.3292 Depreciated $40,800.00 Forward Discount Jap. Yen 110.53 -0.37 110.5147 Appreciated -$4,440,000.00 Forward Premium c ) If the value of a foreign currency is greater (less) forward than it is spot, the foreign currency is said to be at a premium (discount). The spot CAD is 1.3155 = $1 and the six-month forward CAD is 1.3112 = $1. So the six -month forward CAD is at a premium