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Your firm is an Italian importer of British bicycles. You have placed an order with a British firm for 200,000 worth of bicycles. Payment (in
Your firm is an Italian importer of British bicycles. You have placed an order with a British firm for 200,000 worth of bicycles. Payment (in pounds sterling) is due in 12 months. Contract Size Country 10,000 Britain (Pound) 12 Months Forward 10,000 Euro 12 Months Forward SFr. 10,000 Swiss Franc 12 Months Forward U.S. 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 interest APR rates is = 1% 2% 1 - 3% ISF 4% = Compute the obligations of the Italian importer using: 1. A forward hedge 2. A money market hedge 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 interest APR rates is = 1% le = 2% i = 3% IsFr = 4% un importer using
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