Assume that Riverside Corp. from the United States will receive 400,000 pounds in 180 days. The following information is available in current and forward markets: 180-day U.S. interest rate = 8% 180-day British interest rate = 9% 180-day forward rate of British pound $1.50 Spot rate of British pound = $1.48 How much will Riverside Corp. receive in dollars in 180 days fare if it uses a money market hedge for the 400,000 pounds? Please show your steps, thank you!

Assume that Riverside Corp. from the United States will receive 400,000 pounds in 180 days. The following information is available in current and forward markets: 180-day U.S. interest rate = 8% 180-day British interest rate = 9% 180-day forward rate of British pound $1.50 Spot rate of British pound = $1.48 How much will Riverside Corp. receive in dollars in 180 days fare if it uses a money market hedge for the 400,000 pounds? Please show your steps, thank you!

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter22: International Financial Management

Section: Chapter Questions

Problem 1P

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