Hi John,
I have watched your videos on money market hedging and the exchange rates which i believe i am pretty good at answering them and have a good understanding but i have just done a mock exam and unfortunately i have got this question wrong but the answers dont seem to help.
my calculations were:
Borrow 12m dinars @ 1.04% (Six month Interest rate) = 11,538,462
Convert to $ at spot which is above @ 57.52 = 200600
Deposit @ dollars @ 1.005% = $199601
I look forward to your reply.
Regards,
Shane
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BPP Mock Exam 3 Question 16 on money market hedging
7y ago#1You have made a mistake in the last line of your workings.
They are depositing $200,600 at interest of 0.5%, and therefore the amount will have grown after 6 months to $200,600 x 1.005 = $201,602
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