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Huawei imports mobile chips from the US and have $61 million payment due in 9 months. The current annual borrowing and lending rate of $
Huawei imports mobile chips from the US and have $61 million payment due in 9 months. The current annual borrowing and lending rate of $ is 5% and 4% respectively while the annual borrowing and lending rate of is 15% and 13% respectively. The spot rate is 6.36/$ now and 6.65/$ in 9 months.
Huawei uses a money market hedge to protect the value of this payment. What is Huawei's profit/loss (in ) of the money market hedge in 9 months.
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