bpp kit MCq foreign currency risk

This topic has 3 replies, 2 voices, and was last updated 11 years ago by John Moffat.

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November 15, 2014 at 2:59 pm #210231
Hadia
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us company owes European company 3.5m euoro due to be paid in 3 months time the spot exchange rate is $1.96-$2:1euoro currently,annual intrest rates are
BORROWING DEPOSIT

US 8% 3%
EUORUPE 5% 1%
WHAT WILL BE THE EQUILVENT US $ value of payment using money market hedge?
November 15, 2014 at 4:04 pm #210256
John Moffat
Keymaster
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You have the answer in the BPP Revision Kit – I do not understand therefore why you are telling me to answer it.

If you say which bit of the answer is causing you a problem then I will try and help.

(I assume that you have watched the free lecture on money market hedging?)
November 16, 2014 at 7:04 am #210319
Hadia
Member
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my problem is in the part of conversion of foreign currency into local currency ??? iam not understanding this part ?? please help me
November 16, 2014 at 9:51 am #210384
John Moffat
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You will have to watch the lecture on this – I go through in detail in the lecture.
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