40Pts Swap/MoneyMKT AT-HOME DUE Apr.25, 2021 NAME INDIVIDUAL EFFORT-NO SHARING ANSWERS 1-A USAcorp. will pay 6,000,000 Euros (E) in 270 days ( = .75 yr) to a European supplier. USAcorp is concerned about exchange rate risk on the future US$ cost to meet this payable. Spot rate today is $1.16 / E ANNUAL deposit (investing) rate is: Europe = 5.0% ; USA = 2.8% ANNUAL borrowing rate is: Europe = 6.2%; USA 4.0% A) S 10pts MONEY MARKET hedge amount for USAcorp 1-B USAcorp, will receive 4,000,000 Pounds (P) in 216 days ( = .60 yr) from a British customer. USAcorp wants to hedge exchange rate risk on the future US$ value when converting to US$. Spot rate today is $1.37/P ANNUAL deposit (investing) rate is: Europe = 5.0% ; USA = 2.8% ANNUAL borrowing rate is: Europe = 6.2%; USA = 4.0% B) $. 10pts MONEY MARKET hedge amount for USAcorp