Assume that xyz co from the united states will receive


Assume that XYZ co. from the United States will receive 400,000 pounds in 180 days. Would it be better off using a forward hedge or a money market hedge? Substantiate your answer with appropriate quantitative evidence?

The following assumptions are taken

  • 180-day U.S. interest rate = 4%
  • 180-day British interest rate = 4.5%
  • 180-day forward rate of British pound = $1.70
  • Spot rate of British pound = $1.80

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Business Management: Assume that xyz co from the united states will receive
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