Question

if the spot rate is NZ $0.50/$ and the forward rate is NZ $0.55/$ . the spot exchange and the forward rate are C$1.03/$ and C$1.07/$ compute the percentage Change in the NZ$ /C$ during the period​

Answer 1

Assumed worth of ZCB(F) = 100

Development time (t) = 10

Let we accept expected financial specialist's necessary yearly yield rate (r) = 10 %

cost of a zero-coupon bond= P

P = F/[(1+r)^t]

henceforth

:

Step-by-step explanation:

Answer 2

6.19%

Step-by-step explanation:

Given: spot rate= NZ $0.50/$, forward rate = NZ $0.55/$

spot exchange = C$ 1.03/ $, forward rate = C$ 1.07/ $

When a bank enters into a forward contract with an investor, the forward exchange rate is the rate at which the bank commits to exchange one currency for another at a future date.

The current price level in the market for directly exchanging one currency for another for delivery on the earliest possible value date is known as the spot exchange rate.

Spot NZ$ /C$ = 0.484

Forward NZ$ /C$ = 0.514

% Change in NZ$ /C$  = $\frac{(0.514 - 0.484)}{0.484} = 6.19%$ %