Global Power Sdn. Bhd. (GPSB) specialises in the import and export of a wide range of...

 

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Global Power Sdn. Bhd. (GPSB) specialises in the import and export of a wide range of products, including consumer goods, industrial equipment, electronics, and raw materials. The company has developed strong relationships with suppliers and customers in various countries, enabling it to source high-quality products at competitive prices and sell them to clients around the world. Recently, GPSB wanted to hedge against a receipt amounting to Australian Dollar 5,000,000 for the sales of 10,000 generators which is due three months from today. The standard operating procedure of GPSB is to manage its foreign currency risk by hedging against it either with a forward contract or a money market instrument. The following information is available: Exchange rates: Spot Three months forward Interest rates per annum: Australian Dollar Malaysian Ringgit Required: (a) Malaysian Ringgit per Australian Dollar 2.9800 - 3.1000 3.1500-3.2200 Deposit Borrowing 2.8% 4.4% 3.0% 4.5% Calculate the amount of Malaysian Ringgit that GPSB will receive in three months' time if it hedges against the foreign currency risk using: (i) Forward contract; (ii) Money market instrument. Global Power Sdn. Bhd. (GPSB) specialises in the import and export of a wide range of products, including consumer goods, industrial equipment, electronics, and raw materials. The company has developed strong relationships with suppliers and customers in various countries, enabling it to source high-quality products at competitive prices and sell them to clients around the world. Recently, GPSB wanted to hedge against a receipt amounting to Australian Dollar 5,000,000 for the sales of 10,000 generators which is due three months from today. The standard operating procedure of GPSB is to manage its foreign currency risk by hedging against it either with a forward contract or a money market instrument. The following information is available: Exchange rates: Spot Three months forward Interest rates per annum: Australian Dollar Malaysian Ringgit Required: (a) Malaysian Ringgit per Australian Dollar 2.9800 - 3.1000 3.1500-3.2200 Deposit Borrowing 2.8% 4.4% 3.0% 4.5% Calculate the amount of Malaysian Ringgit that GPSB will receive in three months' time if it hedges against the foreign currency risk using: (i) Forward contract; (ii) Money market instrument.

Answer rating: 100% (QA)

Calculating the Amount of Malaysian Ringgit for GPSBs Receivable Given Information GPSB receives AUD ... View the full answer