A Company Will Need to 'Roll Over' Its Existing $500

Multiple Choice

A company will need to 'roll over' its existing $500 000 funding arrangement in two months' time for a further 90 days.It is concerned that interest rates in the short-term debt market may rise in the mean time,and decides to manage the risk exposure by entering into a forward rate agreement with its bank.The bank quotes a price (2Mv5M) of 9.45 to 30.In two months' time the reference rate (BBSW) is 10.20% per annum.Calculate the settlement amount.

A) $881.43
B) $1058.10
C) $1423.80
D) $3750.00