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Assume the following information: 180day U.S. interest rate = 8% 180day British interest rate = 9% F t.180-day = 1.50 USD/GBP S t = 1.48

Assume the following information:

180day U.S. interest rate = 8%

180day British interest rate = 9%

F_t.180-day = 1.50 USD/GBP

S_t = 1.48 USD/GBP

Assume that Riverside Corp. from the United States will receive GBP 400,000 in 180 days. Would it be better off using a forward hedge or a money market hedge? Substantiate your answer with estimated revenue for each type of hedge.

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