A Japanese EXPORTER Has a €1,000,000 Receivable Due in One

question 78

Multiple Choice

A Japanese EXPORTER has a €1,000,000 receivable due in one year.Detail a strategy using a money market hedge that will eliminate any exchange rate risk.

• A)Borrow €970,873.79 today.Convert the euro to dollars at the spot exchange rate, receive $1,165,048.54.Convert these dollars to yen at the spot rate, receive ¥.
• B)Borrow €943,396.22 today.Convert the euro to dollars at the spot exchange rate, convert these dollars to yen at the spot rate, receive ¥117,924,528.30.
• C)Lend €943,396.22 today.Convert the euro to dollars at the spot exchange rate, convert these dollars to yen at the spot rate.
• D)Convert ¥117,924,528.30 to dollars at the spot rate; convert dollars to euro at the spot rate; lend €943,396.22 at 5.25%.

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