Financial Risk Manager Part 1

Financial Risk Manager Part 1

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A bank located in Italy has entered into a 6-month forward contract with an importer, agreeing to exchange GBP 80 million for EUR at a fixed rate of 1.13 EUR per GBP. Over the course of the 6 months, the exchange rate has shifted to 1.12 EUR per GBP. Determine the financial gain or loss that the bank experiences as a result of this forward contract.