Question

Calculate the profit from hedging. A us exporter receives 25,000 in a year. The spot exchange rate is $1.23 for 1. Interest rates borrowing 6% deposit =5% interest rates $: borrowing 12 deposit 10% the expected spot exchange rate in a year is $1.25

Answer 1

Answer:

Calculate the profit from hedging

A us exporter receive £25000 in a year.The Spot exchange rate is $1.23 for £1 .

Interest rate £

Borrowing = 6%

Deposit = 5%

Interest rate $

Borrowing = 12%

Deposit =10%

The expected spot exchange rate in a year = $1.25