The firm executes money market hedge

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Reference no: EM131999554

Assume the following information:

US deposit rate for one year: 11%

US borrowing rate for one year: 12%

New Zealand deposit rate for one year: 8%

New Zealand forward rate for one year: $.40

New Zealand dollar spot rate: $.39

Also assume that a US exporter denominates its New Zealand exports in NZ and expects to receive NZ600,000 in 1 year.

Using the information above, what will be the approximate value of the exports in 1 year in US dollars given that the firm executes a money market hedge?

please show all work

Reference no: EM131999554

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