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You, as a newly minted CFA, plan to invest $2M in US government cash equivalents for the next 90 days. Your client has authorized you
You, as a newly minted CFA, plan to invest $2M in US government cash equivalents for the next 90 days. Your client has authorized you to use non-US Government cash equivalents, but only if the currency risk is heged to US dollars by using forward currency contracts. a. Please calculate the US dollar value of the hedged investments using the data above. Show all calculations. b. Briefly Explain the theory that best accounts for your results. c. Based on this theory please estimate the implied interest rate for a 90-day US government cash equivalent You, as a newly minted CFA, plan to invest $2M in US government cash equivalents for the next 90 days. Your client has authorized you to use non-US Government cash equivalents, but only if the currency risk is heged to US dollars by using forward currency contracts. a. Please calculate the US dollar value of the hedged investments using the data above. Show all calculations. b. Briefly Explain the theory that best accounts for your results. c. Based on this theory please estimate the implied interest rate for a 90-day US government cash equivalent
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