Citadel Co. will receive $400,000 Canadian dollars in 6 months. Assume the annual interest rate of borrowing

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Citadel Co. will receive $400,000 Canadian dollars in 6 months. Assume the annual interest rate of borrowing or lending Canadian dollar is 3% and the interest rate of borrowing or lending U.S. dollar is 2%. If the spot rate of Canadian dollar is $0.95per CAD, how much should the firm borrow in an international money market to hedge the transaction exposure of the CAD receivable transaction?

Posted Date: May 13, 2024 06:55 AM

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Citadel Co. will receive $400,000 Canadian dollars in 6 months. Assume the annual interest rate of borrowing

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To solve this problem we need to determine the amount of US dollars USD that Citadel Co should borro... View the full answer

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