Mithras plc is a UK business that is due to receive 200,000 from a German customer in

Question:

Mithras plc is a UK business that is due to receive €200,000 from a German customer in three months’ time. A money market hedge will be used to manage currency risk and the following borrowing rates are available:

Country Germany UK Borrowing rate per year 16% 10%

The spot rate is £1 = €1.18 - 1.19.

Required:
What is the sterling amount which Mithras plc will need to deposit now as part of the money market hedge?

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Question Posted: Dec 31, 2023 12:12 AM

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Mithras plc is a UK business that is due to receive 200,000 from a German customer in

Question:

Country Germany UK Borrowing rate per year 16% 10%

Step by Step Answer:

To determine the sterling amount that Mithras plc will need to deposit now as ...View the full answer

Financial Management For Decision Makers

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