Question
You are given that the 180-day Australian interest rate is 5% and the 180-day United States interest rate is 6%. The 180-day forward rate of
You are given that the 180-day Australian interest rate is 5% and the 180-day United States interest rate is 6%. The 180-day forward rate of the United States dollar is A$1.50 and the spot rate of the United States dollar is A$1.48. Assume that a company from Australia will receive US$100,000 in 180 days.
- Calculate the estimated revenue for a forward hedge.
2. Calculate the estimated revenue for a money market hedge.
Would it be better to use a forward hedge or a money market hedge?
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Financial Management
Authors: Rajiv Srivastava, Anil Misra
2nd Edition
0198072074, 9780198072072
