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please help asap thank you will like US$. Information for Forward Contract: Forward exchange rate (one yr ): 1.54$/BP Information for Money Market Instruments (MMI):
please help asap thank you will like US\$. Information for Forward Contract: Forward exchange rate (one yr ): 1.54$/BP Information for Money Market Instruments (MMI): Current exchange rate: 1.50$/BP Investment return at Aerion Fund Management (in UK): 4% annual Interest rate of borrowing from Bank of America (in USA): 2% annual Information you need for Currency Options Contract: Options premium: 0.015$/BP Interest rate of borrowing from Bank of America (USA): 2% annual Allowed to exercise options at 1.54 \$/BP If the break-even exchange rate for the Currency Options Contract is 1.46$/BP, and you believe the exchange rate at the time of the payment would be 1.43$/BP, should you sign the contract? Yes. No. You are US company, 500,000 BP (British Pound) payable to UK in one year. Answer in terms of USS. Information for Forward Contract: Forward exchange rate (one yr): 1.54$/BP Information for Money Market Instruments (MMI): Current exchange rate: 1.50 \$/BP Investment return at Aerion Fund Management (in UK): 4% annual Interest rate of borrowing from Bank of America (in USA): 2% annual Information you need for Currency Options Contract: Options premium: 0.015 \$/BP Interest rate of borrowing from Bank of America (USA): 2% annual Allowed to exercise options at 1.51$/BP Let's suppose you signed the Currency Options Contract. The actual exchange rate at the time of the payment is 1.54$/BP. What would you do? Do not exercise the option and take the actual exchange rate of 1.54$/BP. Exercise the option and take 1.51$/BP
please help asap thank you will like
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