Y do v take PV of borrow amount? Isn't the amount already in PV bcuz v converted PV of invest amount?
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Kenduri money market hedge
Correction fv of borrow amount*
We borrow money how much is required to invest right?
Say for eg v need to deposit usd 1000
And usd 1000 say it's 2000gbp
So we should borrow only 2000 ryt? Thts how much v need to deposit ryt?
Thn y do v take fvof 2000 and borrow the fv?
2y ago#2I do not know where you are quoting your figures from.
They need $2.4M in 3 months time but because they are buying $'s now the need fewer $'s now because they will be depositing them for 3 months.
Do not refer to present values and forward values here. It may be the same arithmetic but it is not an academic exercise but a real life way of dealing with the interest involved when borrowing and then depositing.
Have you watched my free lectures on money-market hedging? I explain it in detail with examples.
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