If more then one choice seem like the right answer, please select the one which

Question

If more then one choice seem like the right answer, please select the one which you think is the "best" 1) You (An American firm) respect to pay 100,000 Euros in one year to a European firm and you plan to use the Money market hedge to hedge the FX risk: Then compare the results with a Forward market hedge and pick the best choice for you: USA interest rate is 7%; Europe rate is 9% Spot rate is $1.5/Euro and the Forward rate is $1.70/Euro. Use this data to answer three questions to set up the money market hedge, you will borrow in and invest in a) USA Europe b) Europe; USa 2) Using the money market hedge, how may dollars will you need in one year to cover this payment a) $145.088 b) $152,145 c) $168.346 d) $147,247 3) Compare the results of the money hedge with that of the Forward market hedge. which will you pick a) Money market hedge b) Forward market hedge

Explanation / Answer

Answer:1 USA, europe

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