Question
Assume the following information: U.S. deposit rate for 1 year = 3% U.S. borrowing rate for 1 year = 4% New Zealand deposit rate for
Assume the following information:
U.S. deposit rate for 1 year = 3%
U.S. borrowing rate for 1 year = 4%
New Zealand deposit rate for 1 year = 6%
New Zealand borrowing rate for 1 year = 7%
New Zealand dollar forward rate for 1 year = $.48
New Zealand dollar spot rate = $.49
Also assume that a U.S. exporter denominates its New Zealand exports in NZ$ and expects to receive NZ$500,000 in 1 year. You are a consultant for this firm.
Using the information above, what will be the approximate value of these exports in 1 year in U.S. dollars given that the firm executes a money market hedge?
Group of answer choices
$235,841.
$264,000.
$245,000.
$236,127.
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