solution
solution.
The 1-year interest rate in China is 2% per year and that in Singapore is 1% per year. Interest rates are continuously compounded. The spot rate of SGD/CNY = 5.00. The one year forward rate is
a. 5.05
b. 4.95
c. 5.1
d. 5.0
You have just sold 2-year USD/JPY forward. To hedge the position, you need to:
a. borrow JPY for 2 years, buy USD/JPY two years forward and lend USD for 2 years,
b. borrow USD for 2 years, sell USD/JPY spot and lend JPY for 2 years.
O c borrow USD for 2 years, sell USD/JPY two years forward and lend JPY for 2 years.
d. borrow JPY for 2 years. buy USD/JPY spot and lend USD for 2 years.
Buying HKD/MOP spot and selling it one-year forward at the same time is equivalent to:
a. borrowing HKD for one year
b. borrowing HKD and lending MOP for one year
c. borrowing MOP and lending HKD for one year
d. borrowing MOP for one year
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