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Use the following information to calculate the dollar cost of using a money market
hedge to hedge 209,000 pounds of payables due in 180 days. Assume the firm has
no excess cash. Assume the spot rate of the pound is $1.93 and the 180âday
forward rate is $2.00. The British interest rate is 0.05, and the U.S. interest rate is
0.05 over the 180âday period.
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