In: Finance
FrameSuite Co., a U.S. multinational corporation, has just ordered materials from a British firm. The transaction is denominated in British pounds and your firm will need 2,700,000 pounds in 1 year to pay for the purchase. The 1-year forward rate of the British pound is $1.35 while the spot rate is $1.44. The following interest rates exist:
U.S. |
Britain | |
1 year borrowing rate |
6% |
7% |
1 year deposit rate |
4% |
3% |
Given the information above, If you use a money market hedge, the
amount of dollars you need in 1 year is:
$3,778,991. |
||
$4,017,155. |
||
$3,924,679. |
||
$3,645,000. |
||
$4,001,243. |