Question
4. Assume Baker decides to take the order with Cash Flow = 190,000 in BRL in 3 months and the following set of data Data
4. Assume Baker decides to take the order with Cash Flow = 190,000 in BRL in 3 months and the following set of data Data Cash inflow BRL in 3month 190,000 BRL Spot rate 0.4368 US$/BRL Forward rate provided by bank 0.4227 US$/BRL Forecast spot rate in 3 month 0.4234US$/BRL Three month effective interest rate In US 3.15% Three month effective interest rate In BZ 5.50% a. What is the present value of expected cash flow in USD if there is no hedge? b. What is the present value of guaranteed cash flow in USD if forward hedge is used? c. What is the present value of guaranteed cash flow in USD if money-market hedge is used?
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The Evolution Of Nordic Finance
Authors: Steffen Elkiær Andersen
2011th Edition
0230241557, 978-0230241558
