You are UK company, 400,000 US$ payable to US in one year. Answer in terms of BP (British Pound). Round at four decimal places Examples: 1.23487 ---> 1.2349; 1.23533 --> 1.2353 Information for Forward Contract: Forward exchange rate (one yr): 0.7124 BP/$ Information for Money Market Instruments (MMI): Current exchange rate: 0.7173 BP/$ Investment return at JP Morgan (in US): 5% annual Interest rate of borrowing from HSBC (UK): 4% annual Information you need for Currency Options Contract: Exercise options premium at 0.09 BP/$ Interest rate of borrowing from HSBC (UK): 3% annual Allowed to exercise options at 0.7215 BP/$ Under the COC, the break-even exchange rate is .6169 BP/$. If the management team speculates the exchange rate at the time of the payment would be .6325 BP/$, would they sign the COC contract in this case? No Yes