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Calculate the dollar cost of using money market hedge

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Question - Use the following information to calculate the dollar cost of using money market hedge for a £200,000 payable due in 1year by ABC company of USA. Assume the firm has no excess cash. Assume the spot rate of the pound ($/£) is $1.5715, the 1-year forward rate is $1.5825, the British borrowing and investing interest rates are 5%, and 3.5% respectively while the U.S. borrowing and investing interest rates are 4.5% and 3% respectively over the period.

Reference no: EM133057663

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