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"The forward rate of the Swiss franc is $.50. The spot rate of the Swiss franc is $.48. The following interest rates exist: You need to purchase SF200,000 in 360 days. If you use a money market hedge, the amount of dollars you need in 360 days is:"

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gkosworldreign

Answer:

$96,914

Explanation:

 360‑day borrowing rate in  Swiss as given is 5%

rate =  100 + 5 = 105%

Total = 200,000/105% = SF190,476

The spot rate of the Swiss franc is $.48

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

360‑day deposit rate in  US as given       6%

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

= $5485.68 + $91,428 = $96,914

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