Assume that Riverside Corp. from the United States will receive 400,000 pounds in 180 days. The following information is available in current and forward markets: 180-day U.S. interest rate = 8% 180-day British interest rate = 9% 180-day forward rate of British pound $1.50 Spot rate of British pound = $1.48 How much will Riverside Corp. receive in dollars in 180 days fare if it uses a money market hedge for the 400,000 pounds? Please show your steps, thank you!

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Assume that Riverside Corp. from the
United States will receive 400,000 pounds
in 180 days. The following information is
available in current and forward markets:
180-day U.S. interest rate = 8%
180-day British interest rate = 9%
180-day forward rate of British pound =
$1.50
Spot rate of British pound = $1.48
How much will Riverside Corp. receive in
dollars in 180 days fare if it uses a money
market hedge for the 400,000 pounds?
Please show your steps, thank you!
Transcribed Image Text:Assume that Riverside Corp. from the United States will receive 400,000 pounds in 180 days. The following information is available in current and forward markets: 180-day U.S. interest rate = 8% 180-day British interest rate = 9% 180-day forward rate of British pound = $1.50 Spot rate of British pound = $1.48 How much will Riverside Corp. receive in dollars in 180 days fare if it uses a money market hedge for the 400,000 pounds? Please show your steps, thank you!
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