Examlex
If the current spot exchange rate on the Euro is $1.2812/€ and the two year risk free rate for borrowing in dollars is 3% and 4% for borrowing in Euros,what should be the two year $/€ forward exchange rate?
Exchange Rate
The price of one country's currency in terms of another currency.
Put Option
A financial contract giving the buyer the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specific time.
Strike Price
A term synonymously used with Exercise Price, indicating the fixed price at which an option holder can buy or sell the underlying asset.
Contract Maturity
The predetermined date on which a financial contract, such as a bond or a futures contract, expires or is settled.
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