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Suppose ABCDE Corp. owes 1,000,000 due in 1 month, and can trade at the following quotes: Spot : $1.0440 1-month forward : $1.0445 1-month interest
Suppose ABCDE Corp. owes 1,000,000 due in 1 month, and can trade at the following quotes: Spot : $1.0440 1-month forward : $1.0445 1-month interest rate for EUR (): 3.6% per annum (i.e. per year) 1-month interest rate for USD ($): 4.8% per annum How much would ABCDE Corp. need to pay using forward- rate hedging? $1,043,000 $1,044,500 $1,040,877 $1,045,040
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