FDI Ltd is a UK-based firm that earns revenue from financial investments in the US. It has invested $8 in a US bank for a fixed term of 1 year. The US interest rate is 10% per year. The 1-year forward rate is F = 21 pounds per dollar. If FDI Ltd enters into the forward contract, how many pounds will it get for its dollars in one year's time? State your answer as a number of pounds to 1 decimal place.

FDI Ltd is a UK-based firm that earns revenue from financial investments in the US. It has invested $8 in a US bank for a fixed term of 1 year. The US interest rate is 10% per year. The 1-year forward rate is F = 21 pounds per dollar. If FDI Ltd enters into the forward contract, how many pounds will it get for its dollars in one year's time? State your answer as a number of pounds to 1 decimal place.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter11: Managing Transaction Exposure

Section: Chapter Questions

Problem 1ST

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