Your firm is a U.K.-based exporter of British bicycles. You have sold an order to an Italian firm for 1 worth of bicycles. Payment from the Italian firm (in 6) is due in twelve months. Your firm wants to hedge the receivable into pounds. Not dollars. Interest rates are 3 percent in 6, 2 percent Detail a strategy using spot exchange rates and borrowing or lending that will hedge your exchange rate risk 

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Your firm is a U.K.-based exporter of British bicycles. You have sold an order to an Italian firm for 1,000,000 worth of bicycles. Payment from the Italian firm (in ) is due in twelve months. Your firm wants to hedge the receivable into pounds. Not dollars. Interest rates are 3 percent in ,2 percent in $ and 4 percent in . Detail a strategy using spot exchange rates and borrowing or lending that will hedge your exchange rate risk. Your firm is a U.K.-based exporter of British bicycles. You have sold an order to an Italian firm for 1,000,000 worth of bicycles. Payment from the Italian firm (in ) is due in twelve months. Your firm wants to hedge the receivable into pounds. Not dollars. Interest rates are 3 percent in ,2 percent in $ and 4 percent in . Detail a strategy using spot exchange rates and borrowing or lending that will hedge your exchange rate risk