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You work for a U.S. firm that exports to Peru and expects to receive 10,000,000 Peruvian sol (PEN) a year from now. The one-year U.S.
You work for a U.S. firm that exports to Peru and expects to receive 10,000,000 Peruvian sol (PEN) a year from now. The one-year U.S. interest rate is 3% when investing funds and 6% when borrowing funds. The one-year Peruvian interest rate is 6% when investing funds and 9% when borrowing funds. The current PEN spot rate is $0.25. If your firm decides to use a money market hedge, how many U.S. dollars will it receive a year from now?
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