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Victoria Exports​ (Canada).  A Canadian​ exporter, Victoria​ Exports, will be receiving six payments of   €12,600​, ranging...

Victoria Exports​ (Canada).  A Canadian​ exporter, Victoria​ Exports, will be receiving six payments of  

€12,600​,

ranging from now to 12 months in the future. Since the company keeps cash balances in both Canadian dollars and U.S.​ dollars, it can choose which currency to exchange the euros for at the end of the various periods. Which currency appears to offer the better rates in the forward​ market?  ​(Click on the

  

icon to import the table into a​ spreadsheet.)

Period

Days Forward

​C$/euro

​US$/euro

spot

—

1.3343

1.3236

1 month

30

1.3366

1.3239

2 months

60

1.3393

1.3241

3 months

90

1.3419

1.3247

6 months

180

1.3441

1.3252

12 months

360

1.3467

1.3276

Calculate the forward​ premium, the Canadian dollar​ proceeds, and the difference from the spot rate proceeds in the​ C$/Euro forward market​ below:  ​(Round the forward premium to three decimal places and the Canadian dollar amounts to the nearest​ cent.)

Days

Forward Premium

C$ Proceeds of

Difference

Period

Forward

C$/euro

on the C$/euro

€12,600

Over Spot


Spot

0

1.3343

C$

C$

Solutions

Expert Solution

jeff jeffy answered 1 year ago
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