Question: Compaq Computer has a SF 1 million payable in 30 days. Suppose Compaq can borrow in U.S. at 0.7% and invest in Switzerland at 0.5%

Compaq Computer has a SF 1 million payable in 30 days. Suppose Compaq can borrow in U.S. at 0.7% and invest in Switzerland at 0.5% for 30 days. How could Compaq hedge this payable using a money market hedge? Assume the franc's spot rate is $ 0.65.

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