Question
US deposit rate for 1 year = 1.1% US borrow rate for 1 year = 5.5% New Zealand deposit rate for 1 year = 1.8%
US deposit rate for 1 year = 1.1%
US borrow rate for 1 year = 5.5%
New Zealand deposit rate for 1 year = 1.8%
New Zealand borrow rate for 1 year = 8%
New Zealand dollar forward rate for 1 year = $0.80
New Zealand dollar spot rate for 1 year = $0.90
Assume that a U.S. exporter denominates its New Zealand exports in NZ$ and expects to receive NZ$ 5,600,000. What will be the approximate value of these exports in 1 year in U.S. dollars given that the firm uses a money market hedge?
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Finance For Managers
Authors: Harvard Business School Press
1st Edition
1578518768, 978-1578518760
