Your company will require 1 million british pounds gbp, Ask an Expert

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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 18percent, the continuously compounding CAD interest rate is 3percent, while the British rate is 2percent. 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?

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Financial Management, Finance

Category:- Financial Management
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