Kizspy Question: 2
(Choose 1 answer)
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 exchange rate to use?
A. $1.85 = £1.00
B. $1.8750 = £1.00
C. $1.90 = £1.00
D. none of the above
