An exporter is a UK based company. Invoice amount is $3,50,000. Credit period is three months. Exchange

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An exporter is a UK based company. Invoice amount is $3,50,000. Credit period is three months. Exchange rates in London are :

Spot Rate ($/£)1.5865-1.5905

3-Months Forward Rate($/£)1.6100-1.6140

Rate of Interest in Money Market :

Deposit Loan $7%9%

Compute and show how a money-market hedge can be put in place. Compare and contrast the outcome with a forward contract.

Related Book For answer-question

Advanced Accounting

ISBN: 978-0077431808

10th edition

Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik

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Posted Date: Jun 22, 2023 11:53 PM

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An exporter is a UK based company. Invoice amount is $3,50,000. Credit period is three months. Exchange

Question:

Expert Answer:

To put a moneymarket hedge in place the exporter can follow the steps below Step 1 Calculate the amo... View the full answer

Advanced Accounting

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