Some time ago, a bank entered a long currency forward for 10 million USD. Under the

terms of the contract, the exchange rate was set to be 0.82 USD per CAD. A client is the

counterparty to this contract.

What should be the forward exchange rate offered to a new client on a long forward

for 10 million USD for delivery in 8 months if the bank wants to obtain a premium of

$500,000 (hint: unlike the theoretically correct delivery price that makes the value of

the contract to be 0 at inception, the bank will look to make a profit by setting the

delivery exchange rate so the value of the contract at inception is equal to the

premium)