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Home / Questions / Assume the following information: U.S. deposit rate for 1 year = 11% U.S. borrowing rate f...

# Assume the following information: U.S. deposit rate for 1 year = 11% U.S. borrowing rate for 1 year = 12% New Zealand deposit rate for 1 year = 8% New Zealand borrowing rate for 1 year = 10% New

Assume the following information: U.S. deposit rate for 1 year = 11% U.S. borrowing rate for 1 year = 12% New Zealand deposit rate for 1 year = 8% New Zealand borrowing rate for 1 year = 10% New Zealand dollar forward rate for 1 year = \$.40 New Zealand dollar spot rate = \$.39 Also assume that a U.S. exporter denominates its New Zealand exports in NZ\$ and expects to receive NZ\$600,000 in 1 year. You are a consultant for this firm. Using the information above, what will be the approximate value of these exports in 1 year in U.S. dollars given that the firm executes a money market hedge?

May 08 2021 View more View Less