=+a A UK company exports machine parts to South Africa on three months' credit. The invoice totals
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=+a A UK company exports machine parts to South Africa on three months' credit.
The invoice totals R150m and the current spot rate is R7.46/f. Exchange rates have been volatile in recent months and the directors are concerned that forex rates might move so as to make the export deal unprofitable. They are consider-
ing three hedge strategies:
forward market hedge;
money market hedge;
option hedge.
Other information:
three-month forward rate: R7.5/6;
interest payable for three months' borrowing in rand: 2.5 per cent;
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Related Book For
Corporate Financial Management And How To Write Essays And Assignments
ISBN: 978-1405882897
Coursepack Edition
Authors: Glen Arnold
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