An Australian importing company need to pay 3 . 5 m USD in two years time for
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Question:
An Australian importing company need to pay m USD in two years time for ordered purchases.
The current spot rate is AUD USD Australian interest rates are currently at pa and US interest rates are at pa The net interest rate spread in both countries is read this as the borrowing rates are higher than the given investment rates above Design a money market hedge which will remove the FX risk faced by the company, yet not altering the timing
of the payment. Clearly show the AUD cash flow in the future.
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