2)

A firm is exporting products to England, the last shipment is sent today. The English firm will pay to the U.S. firm 2 MM [GBP] in December 2016 (in three months). The interest rate in England is 0.22 % per year. decide if the firm should enter into a futures contract or do a synthetic forward. SPOT RATE: .7759 3MONTH U.S. T-BILL: 0.27 FUTURES SETT PRICE: 1.2875 CONTRACT UNITS 62,500