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6. BENTELY must pay EURO 1.000.000 in 1 year for supplies from Europe. The spot rate of the EURO is GBP 0.8. The annualized UK
6. BENTELY must pay EURO 1.000.000 in 1 year for supplies from Europe. The spot rate of the EURO is GBP 0.8. The annualized UK interest rate is 2 percent, and the annualized EURO zone interest rate is 1% percent. BENTELY plans to hedge its exposure with a forward contract that it will arrange today. If we assume that interest rate parity exists, determine the forward rate of the forward contract and the amount of GBP that the company will need in 1 year to make its payment to suppliers
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