Explain the use of forward hedge or money market hedge


Assume the following information:
180 day U.S. interest rate = 8%
180 day British interest rate = 9%
180 day forward rate of British pound = $1.50
Spot rate of British pound = $1.48

Assume that Riverside Corp. 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 estimated revenue for each type of hedge.

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Microeconomics: Explain the use of forward hedge or money market hedge
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