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dezoksy [38]
3 years ago
8

81. The forward rate of the Swiss franc is $.50. The spot rate of the Swiss franc is $.48. The following interest rates exist: U

.S. Switzerland 360-day borrowing rate 7% 5% 360-day deposit rate 6% 4% You need to pay a sum of SF200,000 in 360 days. If you use a money market hedge, the amount of dollars you need in 360 days is: a. $101,904 b. $101,923 c. $98,769 d. $96,914 e. $92,307
Business
1 answer:
Alisiya [41]3 years ago
7 0

Answer:

invest  = $96,914

so correct option is d. $96,914

Explanation:

given data

forward rate of the Swiss franc = $.50

spot rate of the Swiss franc = $.48

pay a sum = SF200,000

solution

we know Borrow is here

Borrow = \frac{SF200000}{1.05}

Borrow = SF190,476

and

when we convert it will be

Convert SF190,476 is

Convert  = SF190,476  × $.48 = $91,428

so investment at 6 % is

Invest = 6 % of $91,428 + $91,428

invest = $5485.68 + $91,428

invest  = $96,914

so correct option is d. $96,914

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