Money market hedge of payables

Assignment Help Financial Management

Reference no: EM13911669

Money Market Hedge of Payables. Hawkes Imports, a U.S firm, imports sauvignon blanc wines from New Zealand. It has payables of New Zealand dollars (NZD) 1,000,000 in six month. The treasurer of Hwakes is considering a money market hedge and is faced with the following data:

NZD spot USD 0.62

NZD 6- month forward USD 0.60

USD rate, lending 4%

USD rate, borrowing 4.3%

NZD rate, lending 5%

NZD rate, borrowing 6.2 %

Show the steps involved in this hedge and net cash flow ( cost) of meeting the payables. Assume annual compounding.

Reference no: EM13911669

Questions Cloud

What percentage of all possible observed values of x : Explain what the mean, m, tells us about a normal curve. If the random variable x is normally distributed, what percentage of all possible observed values of x will be.

What will this fixed amount be : Harry is 16 years away from retiring and starts saving $200 a month in an account paying 2% compounded semi annually. When he retires, he wishes to withdraw a fixed amount each month for 24 years. What will this fixed amount be?

Write thermochemical equations : Write thermochemical equations, two ways, for each of the following situations. a) When 1 mole of NH4Cl is dissolved in water, 25.0 kJ is lost by the water

Money market hedge of receivables : Money Market Hedge of Receivables. Tom Turbines, a U.S firm, export windmills to New Zealand and expects receivables of New Zealand dollar (NZD) 2,500,000 in six months. Using the information from problem 10, demonstrate how the firm can use the mone..

Money market hedge of payables : Money Market Hedge of Payables. Hawkes Imports, a U.S firm, imports sauvignon blanc wines from New Zealand. It has payables of New Zealand dollars (NZD) 1,000,000 in six month. The treasurer of Hwakes is considering a money market hedge and is faced ..

Which the expenditure should be recorded : Capitalizing versus expensing. For each of the following expenditures, indicate the type of account (asset or expense) in which the expenditure should be recorded.

Portfolio in the coming month with probability : Your portfolio allocates equal funds to the DW Co. and Woodpecker, Inc. DW Co. stock has an annual return mean and standard deviation of 11 percent and 40 percent, respectively. What is the smallest expected loss for your portfolio in the coming mont..

Find z value for each of the given observed values of x : Let x be a normally distributed random variable having mean m = 30 and standard deviation s = 5. Find the z value for each of the following observed values of x:

What is the size of the settlement : You are serving on a jury. A plaintiff is suing the city for injuries sustained after a freak street sweeper accident. In the trial, doctors testified that it will be five years before the plaintiff is able to return to work. Assume that the salary p..

User Account

All Pages