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Illustrative Examples
| Deposit Currency: | USD100,000 |
| Linked Currency: | EUR |
| Tenor: | One Week |
| Spot Rate: | 1.3360 |
| Option One : | Initial exchange rate = Spot rate |
|---|---|
| Initial Exchange Rate: | 1.3360 (i.e. EUR1 = USD1.3360) |
| Interest Rate of Deposit (Interest Return): |
0.125%p.a. (USD2.40) |
| Option Premium Rate (Option Premium Return): |
20.875%p.a. (USD405.90) |
| Scenario Four: | EUR weakens significantly against USD |
| FINAL EXCHANGE RATE: | 1.3160 |
| Payment Currency: | EUR |
| Maturity Balance Calculation： |
(Principal + Interest Return + Option Premium Return) / Initial |
| Maturity Balance: | (USD100,000+USD2.40+USD405.90)/1.3360 =EUR75,155.91 |
| If customer chooses to convert to USD at the prevailing exchange rate of 1.3160, customer will receive USD98,905.18. | |
| Loss: | USD1,094.82 |
| Annualized Return:: | -56.30% |
Note:
The Spot Rate is the mid-price of buying and selling the currencies.
The related tax to be withheld is not shown in the above example.
The example shown is for reference only and shall not constitute any representation or warranty by the Bank in respect of any possible gain or loss.
