Question
Assume Baker decides to take the order with Cash Flow = 190,000 in BRL in 3 months and the following set of data Data Cash
- Assume Baker decides to take the order with Cash Flow = 190,000 in BRL in 3 months and the following set of data
| Data |
|
| Cash inflow BRL in 3month | 190,000 BRL |
| Spot rate | 0.4368 US$/BRL |
| Forward rate provided by bank | 0.4227 US$/BRL |
| Forecast spot rate in 3 month | 0.4234US$/BRL |
| Three month effective interest rate In US | 3.15% |
| Three month effective interest rate In BZ | 5.50% |
a. What is the present value of expected cash flow in USD if there is no hedge?
b. What is the present value of guaranteed cash flow in USD if forward hedge is used?
c. What is the present value of guaranteed cash flow in USD if money-market hedge is used?
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Social Finance Shadow Banking During The Global Financial Crisis
Authors: Neil Shenai
1st Edition
3030082318, 978-3030082314
