An exporter in India exports fruits to Oman enters into a contract with Omani importer to...

An exporter in India exports fruits to Oman enters into a contract with Omani importer to

deliver OMR 10000 worth of fruits on 1st June 2019 payment to be received within one month

from the date of delivery. The exchange rate in spot market on the date of transaction is INR

186.254 = 1 OMR. The fruits were delivered on 1st July 2019. Assuming that the forward

contract price of INR/OMR is at a forward discount of 7% for 1st July and the spot rate of INR

is expected to depreciate by 7% against OMR by July 2019.

a) Find out the amount of INR to be received by the dealer if he goes for forward contract to

exchange OMR to INR.

b) Find out the amount of INR to be received by the dealer if he goes for actual price in July (3

Marks)

c) If the dealer has an option to sell the OMR in July at 3 % depreciated value from June spot

rate with 5 % premium, should he accept the option. If he accepts the options find out the

amount of OMR received by him and the difference between option price and actual price.

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