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Your firm is a U.K.-based exporter of bicycles. You have sold an order to a Swiss firm for SFr. 1,000,000 worth of bicycles. Payment from
Your firm is a U.K.-based exporter of bicycles. You have sold an order to a Swiss firm for SFr. 1,000,000 worth of bicycles. Payment from the Swiss firm (in Swiss francs) is due in 12 months. Use a money market hedge to redenominate this one-year receivable into a British pound-denominated receivable with a one-year maturity. Currency per U.S. $ 0.5102 interest APR Contract Size Country U.S. $ equiv. Britain 10,000 $1.9600 (pound) 12 months $2.0000 forward 0.5000 rates 10,000 Euro $1.5600 0.6410 = 1% $1.6000 0.6250 1 = 2% 12 months forward Swiss franc 12 SFr. 10,000 $0.9200 SFr.1.0870 3% $1.0000 SFr.1.0000 ISFr. = 4% months forward The following were computed without rounding. Select the answer closest to yours. 509,900.99 500,000 464,874.41 446,730.77 Your firm is a U.K.-based exporter of bicycles. You have sold an order to a Swiss firm for SFr. 1,000,000 worth of bicycles. Payment from the Swiss firm (in Swiss francs) is due in 12 months. Use a money market hedge to redenominate this one-year receivable into a British pound-denominated receivable with a one-year maturity. Currency per U.S. $ 0.5102 interest APR Contract Size Country U.S. $ equiv. Britain 10,000 $1.9600 (pound) 12 months $2.0000 forward 0.5000 rates 10,000 Euro $1.5600 0.6410 = 1% $1.6000 0.6250 1 = 2% 12 months forward Swiss franc 12 SFr. 10,000 $0.9200 SFr.1.0870 3% $1.0000 SFr.1.0000 ISFr. = 4% months forward The following were computed without rounding. Select the answer closest to yours. 509,900.99 500,000 464,874.41 446,730.77
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