Off balance sheet contingent liabilities $60 million direct-credit substitute standby letters of credit issued to a U.S. corporation. $60 million commercial letters of credit issued to a corporation Off-balance sheet derivatives $100 million 10-year interest rate swaps $200 million 2-year forward FX contracts

Question :What is the credit equivalent amount of the off-balance-sheet foreign exchange contracts if it is in-the-money by $4 million? (One to 5 year foreign exchange rate contract credit conversion factor = 5.0 percent) (PLESE SHOW YOUR WORK!)

A. $10 million. B. $2 million. C. $5 million. D. $1 million. E. $9 million.