Cougar Inc. needs 1,000,000 in 30 days. The interest rate (on annual basis) is 5 percent...

 

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Cougar Inc. needs €1,000,000 in 30 days. The interest rate (on annual basis) is 5 percent in Germany and 6 percent in the U.S. The current spot rate for the euro is $1.20. If Cougar uses a money market hedge to hedge the payable, what is the cost (in dollars) after implementing the hedge? (Assume 360 days in a year) Cougar Inc. needs €1,000,000 in 30 days. The interest rate (on annual basis) is 5 percent in Germany and 6 percent in the U.S. The current spot rate for the euro is $1.20. If Cougar uses a money market hedge to hedge the payable, what is the cost (in dollars) after implementing the hedge? (Assume 360 days in a year)

Answer rating: 100% (QA)

To calculate the cost in dollars after implementing the money market hedge we need to consider the i... View the full answer