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Cost of implementing the hedge

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Blake Inc. needs €1,000,000 in 30 days. It can earn 5 percent annualized on a German security. The current spot rate for the euro is $1.00. Blake can borrow funds in the U.S. at an annualized interest rate of 6 percent. If Blake uses a money market hedge to hedge the payable, what is the cost of implementing the hedge?

a. $1,000,000.

b. $1,055,602.

c. $1,000,830.

d. $1,045,644.

Reference no: EM13133852

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