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What is the expected spot rate for september

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Reference no: EM132955379

In July 2021, a USA multinational company assessed the September 2021 spot Cor pound sterling at the following rates:

$ 1.30/£ with probability 0.15

$ 1.35/£ with probability 0.20

$ 1.40/£ with probability 0.25

$ 1.45/£ with probability 0.20 $ I .50/£ with probability 0.20 Required

Problem i) What is the expected spot rate for September, 2021?

Problem ii) If three months forward rate is $1.40, should the firm sell forward its pound receivables due in September, 2021

Reference no: EM132955379

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