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Enter a contract to deliver your pounds for dollars at the

To hedge exchange rate risk, you took the following actions:

Initial transaction of $50 million for 25 millions of British pound, then invest those pounds at 5% rate in the United Kingdom.

Enter a contract to deliver your pounds for dollars at the forward exchange rate $1.94/pound.

What's the total dollar value after the contract?

A. $40.25 million

B. $50.25 million

C. $50.93 million

D. $40.93 million

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Finance Basics: Enter a contract to deliver your pounds for dollars at the

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