A US company is required to make a euro denominated payment in the amount 2500000 erou describe how the company can hedge the risk of payment described above a money market hedge

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describe how the company can mange the risk of the payment with out using financial contract such as a forward or option

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Data for this questions

(euro)

months until payment due 15

US dollar inflation rate 1.39%

euro area inflation rate 1.26%

US dollar interest rate 1.56%

euro area interest rate 2.25%

spot exchange rate EUR/USD 1.1640

required return for similar project in US 18.5%