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What are the costs of mmi

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Reference no: EM133048028

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 $437,383

about $423,464

about $462,423

about $442,971

Reference no: EM133048028

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