Use the following spot and interest rates to answer the following question:
Bid Offer
- Spot rate, EUR/USD or USD per Ac‚¬ 1.2310 1.2340
- USD Interest Rate(per annum) 3.00% 3.25%
- EU Interest Rate(per annum) 4.00% 4.50%
Assume that you are a banker who have access to the above rates. What EUR/USD rate or USD per Ac‚¬ would you quote for an exporter who is interested hedging its EUR100m cash inflows due in three months?
|
|
1.2272
|
|
|
1.2242
|
|
|
1.2251
|
|
|
1.2264
|