Homework Help: finance

Posted by Sara on Thursday, May 5, 2011 at 8:15pm.

A Canadian exporter, Victoria Exports, will be receiving six payments of €10,000, ranging from now to 12 months in the future. Since the company keeps cash balances in both Canadian dollars and US dollars, it can choose which currency to change the euros to at the end of the various periods. Which currency appears to offer the better rates in the forward?

Period Days Forward CAD/€ Mid Rate USD/€ Mid Rate
Spot 1.38390 1.19140
1 month 30 1.38439 1.19260
2 months 60 1.38444 1.19410
3 months 90 1.38590 1.19560
6 months 180 1.38750 1.20130
12 months 360 1.39189 1.21300

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