bpp kit question version 20/21 (PGT Co)

This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.

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October 4, 2022 at 1:50 pm #667852
hm1995
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this is a section b question
the question goes like this
What is the cost in six months’ time of a money market hedge (to the nearest whole
number)?

i dont understand as to why they did not subtract the payment 300000 from the receipts of 500000 in order to calculate the cost in six months time?
October 5, 2022 at 9:03 am #667889
John Moffat
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They are in different currencies. The 500,000 is in dollars and given that the home currency is dollars they do not need to hedge the receipt. They only need to hedge the euro payment.
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