Business, 08.04.2021 20:40 vcasela

You are US company, 500,000 BP (British Pound) payable to UK in one year. Answer in terms of US$. Information for Forward Contract:
Forward exchange rate (one yr): 1.54 $/BP

Information for Money Market Instruments (MMI):
Current exchange rate: 1.50 $/BP
Investment return at Aerion Fund Management (in UK): 4% 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 If the break-even exchange rate for the Currency Options Contract is 1.46 $/BP, and you believe the exchange rate at the time of the payment would be 1.48 $/BP, should you sign the contract?

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You are US company, 500,000 BP (British Pound) payable to UK in one year. Answer in terms of US$. I...

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