Your firm has a British customer that is willing to place a $1 million order, but wants

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Your firm has a British customer that is willing to place a $1 million order, but wants to pay in pounds instead of dollars. The spot exchange rate is $1.85 = 1.00 and the one-year forward rate is $1.90 = 1.00. The lead time on the order is such that payment is due in one year. What is the fairest and rational exchange rate to use?

Answer: $1.90 = 1.00

Posted Date: May 11, 2024 03:31 AM

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Your firm has a British customer that is willing to place a $1 million order, but wants

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