A UK company purchases chemicals from a European distributor and is required to pay for deliveries in euro. The company is risk neutral and expects the exchange rate prevailing on the future payment date to be such as to make it indifferent between taking out a forward contract for the payment date, or, being exposed to the exchange rate risk.

If the payment date forward contract exchange rate is 1.50 euro/ and the forward contract transaction cost is 0.05 euro per euro to be provided, what is the expected spot rate on payment day?

	A.	1.425 euro /
	B.	1.575 euro /
	C.	1.550 euro /
	D.	1.450 euro /