Question
Forward versus Money Market Hedge on Payables. Assume the following information: 90day U.S. interest rate = 0.05 90day Malaysian interest rate = 0.04 90day forward
Forward versus Money Market Hedge on Payables. Assume the following information:
90day U.S. interest rate = 0.05
90day Malaysian interest rate = 0.04
90day forward rate of Malaysian ringgit = $0.400
Spot rate of Malaysian ringgit = $0.444
Assume that the Vale Co. in the United States will need 308,287 ringgit in 90 days. It wishes to hedge this payables position. How much more (or less) would the money market hedge cost than the forward hedge?
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Principles Of Project Finance
Authors: E. R. Yescombe
2nd Edition
0123910587, 9780123910585
