Money Market Hedging with Bid-Ask Spreads
You (US firm) have accounts receivables (ARs) of SF 1,000,000 in 90 days.
Given St of $0.6500 – $0.6530 / SF
Swiss interest rate of 6% - 6.4% p.a. (find for 90 days) and
US interest rate of 8.4% - 8.8% p.a. (find for 90 days).
What are your receivables in dollars if you hedge using money market hedging?
Instead of ARs, if the firm had accounts payables (APs) in Swiss Francs, what are your payables in dollars if you hedge using money market hedging?