Suppose ABCDE Corp. owes €1,000,000 due in 1 month, and can trade at the following quotes: • Spot €: $1.0440 • 1-month forward €: $1.0445 • 1-month interest rate for EUR (€): 3.6% per annum (i.e. per year) • 1-month interest rate for USD ($): 4.8% per annum How much would ABCDE Corp. need to pay using forward- rate hedging? A. $1,043,000 B. $1,044,500 C. $1,040,877 D. $1,045,040
