Question

5. A trader enters into a forward currency position by selling 100 million Yen at 3-month Yen/US$\\ forward rate of 145. After 1 month, the spot exchange rate becomes Yen/US$ 140. The U.S. and\\ Japanese risk-free interest rates at the end of 1 month are respectively 4.5% and 1.0%. (Assume\\ these are the relevant interest costs over 2 months and use discrete annual compounding.) What\\ is the value of the forward contract to the trader at the end of 1 month in terms of US$?\\ [ ] Loss US$12,043\\ [ ] Loss US$28,488\\ [ ] Gain US$8,752\\ [ ] Gain US$23.886

          5. A trader enters into a forward currency position by selling 100 million Yen at 3-month Yen/US$\\
forward rate of 145. After 1 month, the spot exchange rate becomes Yen/US$ 140. The U.S. and\\
Japanese risk-free interest rates at the end of 1 month are respectively 4.5% and 1.0%. (Assume\\
these are the relevant interest costs over 2 months and use discrete annual compounding.) What\\
is the value of the forward contract to the trader at the end of 1 month in terms of US$?\\
[ ] Loss US$12,043\\
[ ] Loss US$28,488\\
[ ] Gain US$8,752\\
[ ] Gain US$23.886

$5. A trader enters into a forward currency position by selling 100 million Yen at 3-month Yen/USforward rate of 145. After 1 month, the spot exchange rate becomes Yen/US 140. The U.S. and Japanese risk-free interest rates at the end of 1 month are respectively 4.5% and 1.0%. (Assume\\ these are the relevant interest costs over 2 months and use discrete annual compounding.) What is the value of the forward contract to the trader at the end of 1 month in terms of US? [ ] Loss US12,043 [ ] Loss US28,488 [ ] Gain US8,752 [ ] Gain US23.886$

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