In April 2012, an FI Bought a One-Month Sterling T-Bill

question 80

Multiple Choice

In April 2012, an FI bought a one-month sterling T-bill paying £100 million in May 2012. The FI's liabilities are in dollars, and current exchange rate is $1.6401/£1. The bank can buy one-month options on sterling at an exercise price of $1.60/£1. Each contract has a size of £31,250, and the contracts currently have a premium of $0.014 per £. Alternatively, options on foreign currency futures contracts, which have a size of £62,500, are available for $0.0106 per £.
-How many options should the FI purchase, and what will be the cost?

• A)1,600 contracts for $16.96.
• B)1,600 contracts for $1,060,000.
• C)3,200 contracts for $44.80.
• D)3,200 contracts for $1,400,000.
• E)3,200 contracts for $2,800,000.

Understand the importance and challenges of listening in communication competency.

Recognize the key Knowledge, Skills, and Abilities (KSAs) across various competencies such as change, teams, and diversity.

Identify both external and internal pressures in change competency.

Demonstrate comprehension of self competency through the ability to identify and diagnose key issues.

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Definitions:

Prepaid Expense

Payments made beforehand for products or services that will be provided later on.

Prepaid Expense

Expenses paid in advance for goods or services to be received in the future, recorded as an asset on the balance sheet until consumed.

Accrued Liabilities

Expenses that have been incurred but not yet paid or recorded in the company's ledger, representing future outflows of cash.

Common Stock Account

An equity account on a company's balance sheet representing the total value of common shares that have been issued.