Individual Project: Wainwright Plastics Report format: MS Word Report Style: Business report

Individual Project: Wainwright Plastics Report format: MS Word Report Style: Business report It is October 23, 2018. You work as an analyst for Wainwright Plastics in Bedford Falls, New York. Sam Wainwright, the CEO, has ordered industrial plastic extrusion equipment from Great Britain at a cost of £ 15,000,000. The payment of £ 15,000,000 is due in in pounds sterling, one year from now, on October 23, 2019. Sam Wainwright is concerned about the foreign exchange exposure of this upcoming payment. Especially during the last 12 months, currency market volatility has been high, fueled mostly by uncertainty about the ultimate terms of Brexit. State Street Bank in Boston offers the following spot rate and 12 months forward points¹: Spot ($/£) 1.3042 – 1.3045 12 months ($/£) 253 - 256 (.0253 / .0256) You look at Bloomberg for interest rates to calculate a money market forward alternative: USD LIBOR 12-months 2.98 % - 3.02 % GBP LIBOR 12-months 1.03 % - 1.08 % Wainwright Plastics does not use futures contracts to hedge, but to make your report complete, you want to include a section on British pound currency futures. You call the Bank of New York Mellon (BNYM) and ask for one year 1.33 $/£ strike call option to buy £ 15,000,000. B