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You enter into an NDF to buy CLP for $.204/CLP. The contract size is CLP2,500,000 and...

  1. You enter into an NDF to buy CLP for $.204/CLP. The contract size is CLP2,500,000 and the contract matures in six months.
  • If the spot rate is $.218/CLP in six months, will you owe the bank money or will the bank owe you money? How much?
  • If the spot rate is $.194/CLP in six months, will you owe the bank money or will the bank owe you money? How much?
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Answer #1

1
The Bank will owe money =2500000*(0.218-0.204)=$35000

2
You will owe the bank money=-2500000*(0.194-0.204)=$25000

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