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Please use the following information to answer the next question: A US firm's Accounts Receivables (from UK) due in 1 year is: GBP 5,000,000
Please use the following information to answer the next question: A US firm's Accounts Receivables (from UK) due in 1 year is: GBP 5,000,000 Current Spot rate for GBP is: $2.00 Annual interest rate in US is: Annual interest rate in UK is: I-year Forward rate for GBP is: 5% 8% $1.91 Suppose the firm wants to set up a money market hedge to turn their receivables into USD in one year. Today, the firm needs to borrow and invest OGBP 5,000,000; USD 9,900,000 O GBP 4,629,630; USD 9,259,259 USD 9,722,222; GBP 5,000,000 USD 9,259,259 ; GBP 4,629,630
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