It is November 1, 2020. You work as a financial analyst for Veridian Dynamics in New York City. Veronica Palmer, the CEO, has ordered a pair of advanced cryogenic pods from the UK for an experiment involving freezing human subjects. equipment will cost L 75 million and is due in Pounds Sterling, one year from now on November 1, 2021. Palmer is concerned about the foreign exchange exposure of this upcoming payment. Especially during the last 12 months, currency market volatility has been high, fueled mostly by uncertainty about the potential weakness of the US dollar. State Street Bank in Boston offers the following spot rate and 12 months forward pointsl: Spot ( $1/ L) 12 months ( $1/ L) 1.3010 / 1.3015 (.0026 / .0027) 26 / 27 You look at Bloomberg for interest rates to calculate a money market forward alternative: USD LIBOR 12-months UK LIBOR 12-months 0.33 % / 0.35 0/0 0.110/0 / 0.12 0/ You call the Bank of New York Mellon (BNYM) and ask for one year 1.3000 $/ L strike call option to buy 75 million. BNYM quotes the following one year offer price for you to buy the option. One year call option on Pounds (exercise price) Percentage of $ amount at exercise price 1.3000 S/ /