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B . Langford Inc. expects to pay $$ 2 , 1 2 5 , 0 0 0 in one year on a loan. The existing
B Langford Inc. expects to pay $$ in one year on a loan. The existing spot rate of the Singapore dollar is $ The oneyear forward rate of the Singapore dollar is $ Langford created a probability distribution for the future spot rate in one year as follows:
Assume that oneyear put options on Singapore dollars are available, with an exercise price of $ and a premium of $ per unit. Oneyear call options on Singapore dollars are available with an exercise price of $ and a premium of $ per unit. Assume the following money market rates:
tableUSSingaporeDeposit rate,
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