The following quotation is given by a bank in Kenya: Spot rate $1: KES106.65 - 109. 85 Three months forward 160 147 cents pm What is the cost of the forward cover for a customer buying dollars one month forward? Select one: a. 5.3% b. 5.4% c. 6.1% d. 5.9% The forecasting equation for the exchange rate between the Kenya shilling and the US dollar is Yt = a + b1X1t +b2X2t Where: Yt is the direct quote X1t is the inflation rate differential in percentage X2t is the growth rate in GNP differential between the two countries in percentage Historical data has been collected and processed using a multiple regression computer package yielding the following results: a = 70, b1= 3.5 and b2 = -2.2 The forecast inflation rate in the US is 5% while in Kenya is 10%. The GNP growth rate is 14% in the US and 6% in Kenya. Required The direct quote between the Kenya shilling and the US dollar is______ Select one: a. KES/$ 105.1 b. None of the above c. KES/$ 70.35 d. KES/$ 69.9 The following quotation is given by a bank in Kenya: Spot rate $1: KES106.65 - 109. 85 Three months forward 160 147 cents pm What is the cost of the forward cover for a customer selling dollars one month forward? Select one: a. 6.1% b. 5.4% c. 5.9% d. 5.3%