Gce Model Questions Vol1 2021 Commerce Question 33
Practice objective / multiple choice question 33 from the 2021 Gce Model Questions Vol1 Commerce examination.
An exporter invoices a foreign buyer for \(\$12{,}000\). The exporter wants a profit margin of 25 % on the cost in Naira. The current spot exchange rate is \(\text{₦}460\) per \(\$1\). Over the next month the Naira is expected to depreciate by 3 % and the forward market quotes a 2 % premium over the expected future spot rate. The bank charges a commission of 0.5 % on the forward contract amount. Determine (a) the forward exchange rate to be used, and (b) the maximum cost in Naira (including commission) that the exporter can incur while still achieving the desired profit margin.
Answer Options
About This Question
This is Gce Model Questions Vol1 2021 Commerce Question 33. It is one of the objective questions from the 2021 Gce Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
Master the Exam!
You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.