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An American exporter denominates its Australian exports in AUD and expects to receive AUD 2,000,000 in 1 year. The company's financial manager expects the
An American exporter denominates its Australian exports in AUD and expects to receive AUD 2,000,000 in 1 year. The company's financial manager expects the AUD rate after 1 year to be 1.40. The Firm decides to hedge its receivables. The USD/AUD Spot rate is 1.35 The USD/AUD Forward rate is 1.38 The AUD Interest rate is 4% The USD interest rate is 3% If the firm executes forward hedge and a money market hedge? Which one is more feasible for the company?
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Finance for Executives Managing for Value Creation
Authors: Gabriel Hawawini, Claude Viallet
4th edition
9781133169949, 538751347, 978-0538751346
