Grounders Inc. is an American firm that will pay MYR 1,991,000 in a year. The annual interest rates in Malaysia and the US are 10% and 13%, respectively. The spot exchange rate for a US dollar is MYR 2.8257 and the expected exchange rate in one year is MYR 2.5453. If the company wants to hedge the payable using the money market hedge, how much US dollars should the company borrow today in the United States?

 

Answer rating: 100% (QA)

To hedge the payable using a money market hedge the company will borrow US dollars today and convert ... View the full answer