Question: ( Forward transactions and hedging ) The three - month interest rate is 5 % for the dollar and is 7 % for the British

(

Forward transactions and hedging

)

The three

-

month interest rate is

5 %

for the dollar and is

7 %

for the British pound. The current spot rate is $

1.542 / .

A dealer sells

19, 000, 000

forward for dollars for delivery in three months.

The dealer is considering using the swap transactions to hedge the risk in the forward position. How many dollars would the dealer borrow in the swap transactions?

( Forward transactions and hedging ) The three -

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