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U.K. U.S. 4% 180-day borrowing rate 6% 180-day deposit rate 5.5% 3% Refer to the interest rates above in U.S. and U.K. Calculate the dollar

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U.K. U.S. 4% 180-day borrowing rate 6% 180-day deposit rate 5.5% 3% Refer to the interest rates above in U.S. and U.K. Calculate the dollar cost of using a money market hedge to hedge 200,000 pounds of payables due in 180 days. Assume the firm has no excess cash and the spot rate of the pound is (bid:$2.00 and ask:$2.02), the 180-day forward rate is (bid:$2.00 and ask:$2.03)

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