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Prosser Kew Shone plc must make a payment of US$450,000 in six months time. Now is December.
Foreign currency option prices Prices are in cents per £1, for a contract size of £12,500
Any money market borrowing in December would be invested at the money market rate for six months. Suppose that instead of using the forward exchange market or the money market, the company used currency options. The spot rate in June when the options are exercised is $1.67. What would be the total cost to the company in June, assuming that the options are not paid for until June? A. £295,247 B. £263,922 C. £255,389 D. £283,383 | |||||||||||||||||||||||||||