A Japanese company has a €1,000,000 receivable due in one year. Using a money market hedge, detail a strategy that will
Posted: Thu Dec 23, 2021 9:00 am
A Japanese company has a €1,000,000 receivable due in one year.
Using a money market hedge, detail a strategy that will eliminate
exchange rate risk?
1-year rates on interest
Borrowing Lending
Dollar 4.50%
4.00%
Euro
6.00%
5.25%
Yen
1.00%
0.75%
Spot exchange rates 1-year Forward
Rates
1.25$/€
1.2262$/€
1.00$/yen
1.03$/yen
Using a money market hedge, detail a strategy that will eliminate
exchange rate risk?
1-year rates on interest
Borrowing Lending
Dollar 4.50%
4.00%
Euro
6.00%
5.25%
Yen
1.00%
0.75%
Spot exchange rates 1-year Forward
Rates
1.25$/€
1.2262$/€
1.00$/yen
1.03$/yen