What brookshire would

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Problem 1: Brookshire, Inc. (U.S. based MNC) needs to invest ten million Cambodian riels in its Cambodian subsidiary to support local operations today. Brookshire would like its subsidiary to repay the Cambodian riels in one year. To hedge the exchange rate risk arising from this financing support, Brookshire would engage in a swap transaction involving a forward contract. Thus, in accordance with the swap transaction, Brookshire would

A. convert the dollars to Cambodian riels in the spot market today and convert Cambodian riels to dollars in one year at today's one-year forward rate.

B. convert the dollars to Cambodian riels in the spot market today and convert Cambodian riels to dollars in one year at the prevailing spot rate one year later.

Reference no: EM133012370

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