Suppose you are the Treasurer of a company that imports goods from England. You estimate that you will have to make two payments: a 5 million pound sterling payment after 6 months and a 6 million payment after another six months (i.e., one year from today). Spot rate S_Ain American terms is $1.26 per pound sterling. You would like to hedge your currency risk exposure.

Question: A rep from a bank calls you and offers to trade currency forward. To check this guys authenticity, you collect todays interest rates in USA and UK. Next, you compute arbitrage-free forward prices (in American terms) for these four maturities.

	USD LIBOR (per year)	Sterling LIBOR (per year)	FA[Forward price in American terms
1 month (30 days)	1 %	0.25 %	?
3 months (91 days)	1.17 %	0.32 %	?
6 months (182 days)	1.43 %	0.47 %	?
1 year	1.78 %	0.68 %	?

For simplicity

Assume these rates are continuously compounded annual risk-free interest rates

Day count convention is Actual/365.

Ignore bid/ask spreads