Solved: Describe the steps to take for a money market hedge, Finance Basics

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Describe the steps to take for a money market hedge

Problem:

Assume that Hester Company has net payables of 500,000 Mexican pesos that are due in 180 days. The interest rate in Mexico is 8 percent over 180 days, and the U.S. interest rate is 4 percent over 180 days. The spot rate of the Mexican peso is $0.10.

Describe the steps to take for a money market hedge. You need to show clearly the amounts that are related to the actions to take.

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Finance Basics: Describe the steps to take for a money market hedge

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