An American firm is owed ¥350,000,000.00 payable in one year. The current spot is $0.0120/¥. A Japanese bank is paying 1.00% on deposits or will lend at 4.00%. A U.S. bank is paying 4.50% or will lend at 6.50%. The firm would like to hedge this exposure with money market hedging. How much do they need to borrow today? $4,038,461.54 ¥346,534,653.47 ¥336,538,461.54 O $4,158,415.84

An American firm is owed ¥350,000,000.00 payable in one year. The current spot is $0.0120/¥. A Japanese bank is paying 1.00% on deposits or will lend at 4.00%. A U.S. bank is paying 4.50% or will lend at 6.50%. The firm would like to hedge this exposure with money market hedging. How much do they need to borrow today? $4,038,461.54 ¥346,534,653.47 ¥336,538,461.54 O $4,158,415.84

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter4: Exchange Rate Determination

Section: Chapter Questions

Problem 20QA

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