Read through section 11-2d, Exhibit 11-3, Comparison of Techniques to Hedge Payables, on page 360 of Chapter 11 in the textbook.

Answer the two questions:

1.What is your new value for the money market hedge? Would this affect your initial decision from reading through section 11-2d? Discuss the drawbacks from using a different hedging technique.

2.Consider the limitations of using the loan proceed either for debt payment or firm?s investment in the money market hedge.

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