An American firm owes A$1,500,000.00 payable in one year. The current spot it$1.7500/A$. An Australian bank is paying 4.50% on deposits or will lend at 7.50%. A U.S. bank is paying 2.50% or will lend at 4.50%. The firm will hedge this exposure with money market hedging. What will be their total cost in one year? 

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Heres how to determine the American firms total cost in one year using money market hedging 1 Calcul... View the full answer