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Your firm is a U.K.-based importer of bicycles. You have placed an order with a Swiss firm for SFr. 1,000,000 worth of bicycles. Payment in
Your firm is a U.K.-based importer of bicycles. You have placed an order with a Swiss firm for SFr. 1,000,000 worth of bicycles. Payment in Swiss francs) is due in 12 months. Use a money market hedge to redenominate this one-year receivable into a euro-denominated receivable with a one-year maturity. Contract Size 10,000 interest APR rates 10,000 Country Britain (pound) 12 months forward Euro 12 months forward Swiss franc U.S. $ equiv. $1.9600 $2.0000 $1.5600 $1.6000 $0.9200 $1.0000 Currency per u.s. $ 0.5102 0.5000 0.6410 0.6250 SFr.1.0870 SFr.1.0000 is = 1% i = 2% if = 3% isFr. = 48 SFr. 10,000 12 months forward The following were computed without rounding. Select the answer closest to yours. Multiple Choice 500,000 464,874.41 446,730.77 509,900.99
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