Financial Risk Manager Part 1
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An Italian bank enters into a 6-month forward contract with an importer to sell GBP 80 million in 6 months at a rate of EUR 1.13 per GBP 1. In 6 months the exchange rate is EUR 1.12 per GBP 1. What is the payoff to the bank from the forward contract?
An Italian bank enters into a 6-month forward contract with an importer to sell GBP 80 million in 6 months at a rate of EUR 1.13 per GBP 1. In 6 months the exchange rate is EUR 1.12 per GBP 1. What is the payoff to the bank from the forward contract?
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A
EUR −800,000
B
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