B D E 1 2 3 4 5 A US firm must pay MXN300,000,000 in 90 days and wishes to hedge it. It wants to minimize its dollar outlay, would it be better off using a forward hedge or a money market (MM) hedge? 6 USD Spot Price Forward 90-day Interest 1.50% 3.00% 0.025 0.020 7 8 USD 9 MXN 10 11 Forward hedge: 12 Amount in MXN 13 USD needed 14 15 MM hedge: 16 17 18 19 MXN needed to get MXN300M in 90 days USD equivalent of MXN needed USD invested at 90-day interest 20 21 22 23