Question
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
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
answer in word not excel
describe how the company can mange the risk of the payment with out using financial contract such as a forward or option
answer in wor not exel
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%
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