How many Euros can you buy with 1 US Dollar? 2. ow many Australian Dollars ) can

Question

How many Euros can you buy with 1 US Dollar? 2. ow many Australian Dollars ) can you buy with USS1,000? 3.Ifyou purchase Swiss Frac (CHF) 50,000 of supplies from Switzerland how much will this cost in USS today? In the above problem what can you do if you do not have to pay for 60 days and you wanted to hedge your position? b. What will it cost in USSif this is the case? Forward Rates for Swiss Fracs (CHF) per US Dollar (USD 30 day forward 60 day forward 90 day forward CHF 0.9449 USS CHF 0.9312/ USS CHF 0.9299 /USS 5. How many Mexican Pesos can you buy with 900 British Pounds (GBP)? Is the Swiss Franc appreciating or depreciating in the forward market?

Explanation / Answer

1) You can buy 0.86 Euros for USD 1

2) You can buy 1350 Australian Dollars for USD 1000

3) 1 Swiss Franc = 1.01 USD

50000 Swiss Franc will be 1.01*50000 = 50371.25 USD

4)

a) Borrow Swiss Franc and lend the USD in the market to hedge.

b) 30 Day Forward = 50000*0.9449 = 47245 USD

60 day forward = 50000*0.9312 = 46560 USD

90 Day forward = 50000*0.9299 = 46495 USD

5) 1 GBP = 26.88 Mexican Peso

So 900 GBP will be equal to 26.88*900 = 24187.70 Mexican Peso

6) Swiss Franc is appreciating in the forward market with USD/CHF rate being 0.99 from 0.98 for the past two weeks.

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