Suppose the Spot Exchange Rate Is AUD/SGD0

question 91

Essay

Suppose the spot exchange rate is AUD/SGD0.9820, and that interest rates in Australia are 5% p.a.while those in Singapore are 3% per annum.
A.Calculate the 180-day forward rate.(Note that Singapore uses a 365-day financial year.)
B.What is the size of the forward premium or forward discount?
C.What arbitrage opportunity would exist if you were able to trade a 180-day forward contract at AUD/SGD0.9820?

---

Definitions:

Termination Reaction

A chemical reaction that halts the growth of a polymer chain by removing reactive intermediates, ending the polymerization process.

Photochemically Initiated

Describes a process or reaction that begins when light energy is absorbed by a chemical substance.

Methane

A colorless, odorless, flammable gas that is the simplest alkane, consisting of one carbon atom bonded to four hydrogen atoms.

Chlorine

A chemical element with the symbol Cl and atomic number 17, known for its extensive use in disinfection and its role as a bleaching agent.