What would be your hedged annual cash flow in dollars

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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%, the 18 month forward rate for one dollar in terms of pounds = 0.608706 Pounds per 1 US $, the 36-month forward rate for one pound in dollars = 0.616862 Pounds per 1 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: EM131553372

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