On july 1, 2008, a company enters into a forward contract to buy 10 million JPY on January 1, 2009. On September 1, 2008, it enters into a forward contract to sell 10 million JPY on January 1, 2009. What is the payoff from this strategy ?
Many thanks作者: soddy1979 时间: 2011-7-11 17:31
The exchange rate differential.
If you provide me the exchange rates (for the first and second forward contracts) i can give you a clearer explanation. The exchange rate on January 1, 2009 does not matter as the company has effectively 'closed out' its position via an offsetting contract.
