Your firm is an Italian importer of British bicycles. You have placed an order with a British firm for 2,000,000 worth of bicycles. Payment (in pounds sterling) 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.

Currency per U.S. Contract Size 10,000 Country Britain U.S. $ equiv. $ 1.9600 0.5102 interest APR (pound) 12 months $ 2.0000 f 0.5000 rates 10,000 forward Euro 12 months $ 1.5600 0.6410 is $ 1.6000 0.6250 forward = = = = 2.3.% 3.2% 3.3% 4.4% SFr. 10,000 SFr. if isFr. 1.0870 Swiss franc $ 0.9200 12 months $ 1.0000 forward SFr. 1.0000 Currency per U.S. Contract Size 10,000 Country Britain U.S. $ equiv. $ 1.9600 0.5102 interest APR (pound) 12 months $ 2.0000 f 0.5000 rates 10,000 forward Euro 12 months $ 1.5600 0.6410 is $ 1.6000 0.6250 forward = = = = 2.3.% 3.2% 3.3% 4.4% SFr. 10,000 SFr. if isFr. 1.0870 Swiss franc $ 0.9200 12 months $ 1.0000 forward SFr. 1.0000