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2. On January 1 2010, BOEING is awarded a contract to supply one Boeing 777 to Air France-KLM. On July 1, BOEING will receive a payment of 183 for this sale. BOEING has decided to use Money Market Hedge in order to manage transaction exposure. Assume euro interest rate is 15% (annualized) and exchange rate in January 1, 2010 is 1.06$/. a. What is the US dollar interest rate? b. At which exchange rate in 07-01-2010 the Gain (Loss) on Money Market Hedge will be 0? $ Value of Original Receivable (million $) 183 Gain & (Loss) Money | on Market Hedge (millions $) 6.46 TOTAL CASH FLOW (million$) Spot exchange rate scenarios (07-01-2010) 1 = 1$ 1 = 0.95$ 1 = 1.1$ 1 = 0.89$ 1 = 1.5$ 2. On January 1 2010, BOEING is awarded a contract to supply one Boeing 777 to Air France-KLM. On July 1, BOEING will receive a payment of 183 for this sale. BOEING has decided to use Money Market Hedge in order to manage transaction exposure. Assume euro interest rate is 15% (annualized) and exchange rate in January 1, 2010 is 1.06$/. a. What is the US dollar interest rate? b. At which exchange rate in 07-01-2010 the Gain (Loss) on Money Market Hedge will be 0? $ Value of Original Receivable (million $) 183 Gain & (Loss) Money | on Market Hedge (millions $) 6.46 TOTAL CASH FLOW (million$) Spot exchange rate scenarios (07-01-2010) 1 = 1$ 1 = 0.95$ 1 = 1.1$ 1 = 0.89$ 1 = 1.5$

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