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1. A U.S. exporter expects to receive TL500,000 in 1 year. Using the information below, what will be the approximate value of these exports in
1. A U.S. exporter expects to receive TL500,000 in 1 year.
Using the information below, what will be the approximate value of these exports in 1 year in U.S. dollars given that the firm executes a forward hedge?
U.S. deposit rate for 1 year | = | 1% |
U.S. borrowing rate for 1 year | = | 2% |
Turkey deposit rate for 1 year | = | 8% |
Turkey borrowing rate for 1 year | = | 10% |
TL forward rate for 1 year | = | $0.13 |
TL spot rate | = | $0.14 |
| a. | $66,000 |
| b. | $65,000 |
| c. | $80,000 |
| d. | $60,000
|
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