Eliminate the exporters exchange rate risk

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Reference no: EM13925211

An American exporter has just sold €100,000 worth of shoes to a French customer.

Payment is due in one year.

Interest rates in dollars are 7.10 percent in the U.S. and 5 percent in the euro zone.

The spot exchange rate is $1.25/€1.00. Use a money market hedge to eliminate the exporter’s exchange rate risk.

Reference no: EM13925211

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