How many jod does pablo need now

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The 360-day borrowing and deposit rate in the U.S. is 7% and 4%, respectively. The 360-day borrowing and deposit rate in Jordan is 5% and 2%, respectively. Pablo Corp. will need 200,000 Jordanian dinar (JOD) in 360 days. The current spot rate of the dinar is $1.60, the 360-day forward rate is $1.58, and the spot rate is 360 days will be $1.61.

Problem a. If Pablo decides to implement a money market hedge, how many JOD does Pablo need now?

Problem b. If it decides to implement a money market, how many dollars will it need to pay back in 360days?

Problem c. If it decides not to hedge, how many dollars will it need to pay back in 360 days?

Problem d. In the previous question of Pablo CO., it is better for Pablo not use the money market hedge (True or False)

Reference no: EM132885205

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