Your firm is a U. K.-based importer of bicycles. You have placed an order with a Swiss firm for SFr. 1,000,000 worth of bicycles. Payment (in Swiss francs) is due in 12 months. Use a money market hedge to redenominate this one-year receivable into a euro-denominated receivable with a one-year maturity. Contract Size Country U. S. $ equiv. Currency per U. S. $ interest rates APR
€10,000 Britain (Pound) $1.96 €0.5102 is = 1%
12 Months Forward $2.00 €0. 5000 ie= 1%
€10,000 Euro $1.56 € 0.64 ie= 2%
12 Months Forward $1.60 € 0.63 ie= 3%
SFr. 10,000 Swiss Franc $0.92 SFr. 1.0870 iSFr.= 4%
12 Months Forward $1.00 SFr. 1.0000

The following were computed without rounding. Select the answer closest to yours.

a. £803,721.49
b. €800,000
c. £780,312.13
d. £72,352.94