TION 4 (5 Marks) ompany is currently finalizing an agreement to sell 100 gismos to a customer in Britain for 00. While the negotiated price provides for a reasonable profit based on the current exchange 1 = C$2.50, the sale will be on credit with payment due in 3 months. Talk of a strengthening an dollar has unsettled you because of its potential impact on the profit from the sale, and you king about hedging your commitment through the use of a forward contract. The effective interest rate in Canada is 4%. The interest rate in Britain is 6%. What 3-month forward ge rate, expressed similarly as above, would be consistent with interest rate parity? Use SIX I places. = 250,000 AL SPACE 3 month Hortive annual interest rate Canada 4%. Britain 6% 1=C$2.5 0,000 x 2.5 = $625/000 $629 12 = 0.25 427 40.25365 = 91.25 days. 68