Please use information to answer the question below:A US firm's expected Accounts Receivables from UK due in 1 yearGBP8, 000, 000 Current Spot Rate (SR) forGBPUSD 1.50Annual interest rate in US (Rh)5% Annual interest rate in UK (Rf)8%If the I - year Forward rate for GBP is $1.49, then based on all information given above, the firm should: use a money market hedge use a forward hedge
Please use information to answer the question below:A US firm's expected Accounts Receivables from UK due in 1 yearGBP8, 000, 000 Current Spot Rate (SR) forGBPUSD 1.50Annual interest rate in US (Rh)5% Annual interest rate in UK (Rf)8%If the I - year Forward rate for GBP is $1.49, then based on all information given above, the firm should: use a money market hedge use a forward hedge
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
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Please use information to answer the
question below:A US firm's
expected Accounts Receivables
from UK due in 1 yearGBP8, 000, 000
Current Spot Rate (SR) forGBPUSD
1.50Annual interest rate in US (Rh)5%
Annual interest rate in UK (Rf)8%If the
I - year Forward rate for GBP is $1.49,
then based on all information given
above, the firm should: use a money
market hedge use a forward hedge
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