(Transaction Exposure)Trident A U.S.-based company, has concluded a sale of telecommunications equipment to Regency (U.K.). A total payment of 2,000,000 is due in 90 days. Given the following exchange rates and interest rates, the break-even investment rate (for money market hedge) is Answer % when comparing the forward hedge and the money market hedge. Assumptions Value 90-day A/R in pounds 2,000,000.00 Spot rate, US$ per pound ($/) $1.5610 90-day forward rate, US$ per pound ($/) $1.5461 3-month U.S. dollar investment rate 4.000% 3-month U.S. dollar borrowing rate 7.000% 3-month UK investment interest rate 7.500% 3-month UK borrowing interest rate 9.000% Put options on the British pound: Strike rates, US$/pound ($/) Strike rate ($/) $1.55 Put option premium 1.554% Strike rate ($/) $1.54 Put option premium 1.544% Strike rate ($/) $1.55 Call option premium 1.517.% Trident's WACC 12.000% Maria Gonzalez's expected spot rate in 90 days, US$ per pound ($/) $1.5431

(Transaction Exposure) Trident A U.S.-based company, has concluded a sale of telecommunications equipment to Regency (U.K.). A total payment of 2,000,000 is due in 90 days. Given the following exchange rates and interest rates, the break-even investment rate (for money market hedge) is % when comparing the forward hedge and the money market hedge. Value 2,000,000.00 $1.5610 $1.5461 4.000% 7.000% 7.500% 9.000% Assumptions 90-day A/R in pounds Spot rate, US$ per pound ($/) 90-day forward rate, US$ per pound ($/L) 3-month U.S. dollar investment rate 3-month U.S. dollar borrowing rate 3-month UK investment interest rate 3-month UK borrowing interest rate Put options on the British pound: Strike rates, US$/pound ($/) Strike rate ($/) Put option premium Strike rate ($/) Put option premium Strike rate ($/) Call option premium Trident's WACC Maria Gonzalez's expected spot rate in 90 days, US$ per pound ($/) $1.55 1.554% $1.54 1.544% $1.55 1.517.% 12.000% $1.5431