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What was gm cost of the money market hedge

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Reference no: EM132396514

Suppose it is 1987 and General Motors uses a money market hedge to protect an Lit 200 million payable due in one year. The U.S. interest rate at the time of the hedge was 9% and the lira interest rate was 14%. If the spot rate moved from Lit 1293 at the start of the year to Lit 1349 at the end of the year, what was GM's cost of the money market hedge?

a) $3,647

b) $414

c) GM gained $1,069

d) GM gained $5,631

Kindly provide working

Reference no: EM132396514

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