Ministry of Health in Jordan Ministry of Health in Jordan has just signed a contract to purchase Corona Vaccine from UK for British Pound 3,000,000 . The purchase was made in December 2020 with payment due six months later in June 2021. The Ministry of Health is considering several hedging alternatives to reduce the exchange rate risk arising from the sale. To help the Ministry of Health make a hedging decision you have The spot exchange rate is JD1.250 / Pound The six month forward rate is JDL.22 / Pound CVTs cost of capital is 11 % UK 6-month borrowing rate is 9% ( or 4.5% for 6 months (UK 6-month lending rate is 7% (or 3.5% for 6 months) Jordan 6-month borrowing rate is 8x (or 4% for 6 months) Jordan 6-month lending rate is 6 % ( or 3 % for 6 months ) June call options for Pound 750,000 : strike price.28 , premium price is Ministry of Health forecast for 6-month spot rates is JD1.27 / Pound The budget rate , or the highest acceptable purchase price for this Corona Vaccine , JD3,900,000 or JDL30 / Pound would be by an amount equal to ------ with a forward hedge than if they had NOT hedged and their predicted exchange rate for 6 months had been correct o worse oft ; JD150,000 b. worse oft , JD151,000 c. better off ;