Question
In: Accounting
An Omani car dealer enters into a contract with German manufacturing company for purchase of 25...
An Omani car dealer enters into a contract with German
manufacturing company for purchase of 25 cars on 1st February 2019
payment to be made within one month from the date of delivery. The
exchange rate in spot market on the date of transaction is OMR
0.43556 = 1 EUR. The total cost of 25 cars amounts to Euro 625000.
The car was delivered on 1st June 2019. Assuming that the forward
contract price of OMR is at a forward premium of 5% for 1st July
and the spot rate of OMR is expected to appreciate by 8% against
Euro by July 2019.
a) Find out the amount of OMR to be paid by the dealer if he
goes for forward contract. (
b) Find out the amount of OMR to be paid by the dealer if he
goes for actual price in July
c) If the dealer has an option to buy the EURO in February at
5% appreciated value of OMR from February spot rate with 5 %
premium, should he accept the option. If he accepts the options
find out the amount of OMR paid by him and the difference between
option price and actual price.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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