Question
You are US company, 300,000 BP (British Pound) payable to UK in one year. Answer in terms of US$. Information for Forward Contract: Forward exchange
You are US company, 300,000 BP (British Pound) payable to UK in one year. Answer in terms of US$.
Information for Forward Contract:
Forward exchange rate (one yr): 1.52 $/BP
Information for Money Market Instruments (MMI):
Current exchange rate: 1.52 $/BP
Investment return at Aerion Fund Management (in UK): 5% 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 $/BP
What are the costs of MMI? (Answer in US$ of course. You are US company!)
Group of answer choices
about $462,423
about $423,464
about $437,383
about $442,971
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Finance Bundling And Finance Transformation
Authors: Frank Keuper, Kai-Eberhard Lueg
1st Edition
3658042109, 978-3658042103
