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Sir,pls how do the examiner come up with the net dollar import of $1,150,000?
And also under the money market hedge, how do the examiner arrived at £595,373 and I tried to multiply at 5.5% but did not get the total cost of £609,017. Pls I need your help sir
I thought lammer plc could borrow dollar.pls ,sir help me and explain why he is boorowing but pound. Thanks
Company 2 imports $890; Company 3 imports $750; Company 1 exports $490.
890 + 750 – 490 = a net $1,150 (and all the figures in the question are given in ‘000’s !)
The question says that the interest rates are annual rates, so you divide by 2 to get the rate for six months.
Since Lammer is a net importer from the US, they will need to pay $’s.
So they will borrow GBP, convert to $’s, and then invest the $’s.
My free lectures on foreign exchange risk management will help you.
Sir, I tried to get £595,373 but could not. How dI’d examiner arrived at £595,373? Thank you.
I am now away from home until late Sunday night and so do not have access to the question.
Please ask again on Monday and I will answer you then.
Sir,I tried to get £595,373 but could not.how did the examiner arrive at £595,373. I need help pls. Thank you
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