Question

# 1) Assume the following information: U.S. deposit rate for 1 year= 11% U.S. borrowing rate for...

1) 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/NZ\$

New Zealand dollar spot rate = \$.39/NZ\$

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?

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