Question: Use the following information to answer questions 3 and 4. Assume the following information: U.S. deposit rate for 1 year = 11% U.S. borrowing rate

Use the following information to answer questions 3 and 4. Assume the following information: U.S. deposit rate for 1 year = 11% U.S. borrowing rate for 1 year = 12% Swiss deposit rate for 1 year = 8% Swiss borrowing rate for 1 year = 10% Swiss forward rate for 1 year = $.41 Swiss franc spot rate = $.39 Also assume that a U.S. exporter denominates its Swiss exports in Swiss francs and expects to receive SF600,000 in 1 year. 3. Using the information above, what will be the approximate value of these exports in 1 year in U.S. dollars given that the firm executes a money market hedge? SHOW YOUR CALCULATIONS OR EXPLANATIONS AND YOUR ANSWER. 4. Using the information above, what will be the approximate value of these exports in 1 year in U.S. dollars given that the firm executes a forward hedge? SHOW YOUR CALCULATIONS OR EXPLANATIONS AND YOUR ANSWER. MONEY MARKET HEDGE

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