Royal Minty of Britain has purchased 20,000 ounces of silver from Silver Products at US$8.30, payable in 180 days. The current spot rate is 1.8127 ($US/£) and the 180-day forward is 1.7863. The CEO at Royal Minty suggests that the spot rate in six months time will be 1.7915.
Interest rates in Britain are currently 4. 70 percent for 180 days and 1.15 percent in the United States.
a. Outline the various options available to Royal Minty to handle its foreign exchange exposure.
b. Make a recommendation.