Assume that rEUR = 8%, rUSD = 3% and X0USD/EUR = 1.28. You want a long forward position in EUR 210,000 1-Year forward. Your banker quotes you the following USD/EUR forward rate: F1USD/EUR = 1.25. Which choice is more favorable, the actual forward contract or set up a synthetic forward position?

Choices:

Do not have enough information to answer this question

Actual Forward Position

Both choices are the same

Synthetic Forward Position