What is the maximum that you would pay

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Reference no: EM131051679

Your company will require 1 million British pounds (GBP) sterling 2 months from now. Right now, this would cost you 2 million dollars Canadian (CAD), but your firm wants to enter into a RANGE FORWARD to execute that purchase. The spot exchange rate has a volatility of 18%, the continuously compounding CAD interest rate is 3%, while the British rate is 2%. If the minimum that you would pay for the 1 million pounds is 0.30 million CAD less than today’s price, what is the maximum that you would pay?

Reference no: EM131051679

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