Because it is unlikely she will be able to visit you this year, your wealthy Canadian aunt
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Question:
Because it is unlikely she will be able to visit you this year, your wealthy Canadian aunt wants to send you a present for your birthday. You expect she will give you CAD 5507 in 9 months. Having taken this course, you know you can lock in the AUD rate for this CAD receivable using a money market hedge. (Annualized) 9-month interest rates in Canada are 8.6%-8.4%, and 9-month interest rates in Australia are 3%-2.8%. The current bid-ask spot rates are 1.2375-90 AUD/CAD.
What is the locked in AUD value of this present?
a. 6536.4262
b. 7199.4115
c. 7105.2638
d. 4639.6988
e. 7095.2517
Related Book For
Corporate Finance
ISBN: 978-0071339575
7th Canadian Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Ro
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