What is way you could hedge your exposure

Assignment Help Financial Management

Reference no: EM132037201

If the spot rate for British pounds is 0.6 pounds equals 1 US $, and annual interest rate on fixed rate one-year deposits of pounds is 3.25% and for US$ is 2.25%, what is the eighteen-month forward rate for one dollar in terms of pounds? Assuming the same interest rates, what is the 36-month forward rate for one pound in dollars? Is this an indirect or a direct rate? If the forward rate is an accurate predictor of exchange rates, in this case will the pound get stronger or weaker against the dollar? What does this indicate about the market’s inflation expectations in the UK compared to the US? Assume you plan to buy 10 million pounds of UK consols and hold them for three years, using the information above what would be your hedged annual cash flow in dollars. What is a way you could hedge your exposure if you thought the $ would weaken?

Reference no: EM132037201

Questions Cloud

Building mobile applications : "What you see - is what you get, building mobile applications. Choose one and how you can incorporate it into your cloud project (you may implement).

By how much should shelby increase the lower of cost : Based on the third quarter inventory values below, by how much should Shelby increase the Lower of Cost or Market reserve

Explained in the help section for the workforce compensation : As explained in the help section for the workforce compensation, training, and product assembly decision screen if a company pays a drone PAT member.

Process of assessing security requirements : What is involved in the process of assessing security requirements and defining the security structure with policies?

What is way you could hedge your exposure : What is a way you could hedge your exposure if you thought the $ would weaken?

What the accounts receivable turnover : Net sales for 2020 were $3,160,000, and gross profit was $1,600,000. The accounts receivable turnover for 2020 was what

Construct a java application that accomplishes : The assignment required me to construct a Java application that accomplishes the following tasks:

Calculate the bank spread and earning assets : Calculate THE Bank’s earning assets. Calculate THE Bank’s ROA. Calculate THE Bank’s spread.

What are the pros and cons for oracle : What are the PROS and CONS for Oracle(SaaS)? Is there any license fees? Monthly or annually? max number of users?

User Account

All Pages