1 0

I hope you guys can help me with a solution to this problem.

Let's say you have bought something for YYY 100 000 which will be handed over to you in December 2011. And you also have the following financial data in february 1. 2011 for the currencies XXX and YYY:

Exchange rates XXX/YYY:
Spot: 6.94
3m fwd: 7.01
6m fwd: 7.08
9m fwd: 7.02
12m fwd: 7.20

Interest rates:
XXX: 1m: 5.41, 3m: 5.25, 6m: 5.44, 12m: 5.32
YYY 1m: 1.15 3m: 1.17 6m: 1.50 12m: 1.55

All interest rates are based on annual compounding.

Is there a way you can use several forward contracts to reduce risk? And how does it work?
AdBlock Detected

We get it, advertisements are annoying!

But it's thanks to our sponsors that access to Trade2Win remains free for all. By viewing our ads you help us pay our bills, so please support the site and disable your AdBlocker.

I've Disabled AdBlock