USA will receive 10,000,000 Pounds (P) in 288 days ( = .80 yr) from a...
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USA will receive 10,000,000 Pounds (P) in 288 days ( = .80 yr) from a British customer. USA wants to hedge exchange rate risk on the future US$ value when converting P to US$. Spot rate today is $1.37 / P
ANNUAL deposit (investing) rate is: U.K. = 2.75% ; USA = 6.25%
ANNUAL borrowing rate is: U.K. = 4.25% ; USA = 8.4%
What is the Money Market Hedge amount for USA?
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