Question

f you are to receive SF in the future, you can hedge your FX risk by...

f you are to receive SF in the future, you can hedge your FX risk by

Group of answer choices

Borrowing SF, selling SF for $ in spot market, investing $

buying SF forward

none of the options

borrowing $, buying SF in spot market, investing in SF

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Homework Answers

Answer #1

Money Market Hedge Steps:

1. Borrow in Foreign currency, whose maturity value is equal to Proceedings.

2. Convert the Loan procedds into Home Currency using spot Rate.

3. Deposit the loan proceeding in Home currency for specified period

4. Realize the Matuirty of deposit

5. Receive the foreign curreny, and clear the loan taken in foreign currency.

Hence Option A is correct.

Pls do rate, if the answer is correct and comment, if any further assistance is required.

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