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a. SFr. 1,728,900.26 b. SFr. 1,600,000 c. SFr. 1,544,705.88 d. SFr. 800,000 Your firm is a Swiss importer of bicycles. You have placed an order
a. SFr. 1,728,900.26
b. SFr. 1,600,000
c. SFr. 1,544,705.88
d. SFr. 800,000
Your firm is a Swiss importer of bicycles. You have placed an order with an Italian firm for 1,000,000 worth of bicycles. Payment (in euro) is due in 12 months. Use a money market hedge to redenominate this one-year receivable into a Swiss franc-denominated receivable with a one-year maturity. Contract U.S. $ Currency per Country Size equiv. U.S. $ 10,000 Britain (pound) $ 1.9600 0.5102 interest APR 12 months forward $ 2.0000 0.5000 rates 10,000 Euro $1.6000 0.6410 i$ = 1% 12 months $1.5600 0.6250 = 2% forward SFr. 10,000 Swiss franc $1.0000 SFr. 1.0870 i = 3% 12 months forward $0.9200 SFr. 1.0000 isFr. = 2% The following were computed without rounding. Select the answer closest to yoursStep by Step Solution
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