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Your company is a Swiss exporter of bicycles. You have sold an order to a French firm for euro 1,000,000 worth of bicycles. Payment from
Your company is a Swiss exporter of bicycles. You have sold an order to a French firm for euro 1,000,000 worth of bicycles. Payment from the French firm (in euro) is due in 12 months. Describe the details of a money market hedge strategy to redenominate this one-year receivable into a Swiss franc-denominated receivable with a one-year maturity. What is the amount of Swiss franc your company will get at the end of the 12-month period? Exchange rates and 12-month interest rates are specified in the table below
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