Computer Has a £1 Million Receivable That It Expects to Collect

question 7

Multiple Choice

Computer has a £1 million receivable that it expects to collect in one year. Suppose the interest rate on pounds is 15%. How could Dell protect this receivable using a money market hedge?

• A) borrow £1 million pounds today
• B) lend £1 million pounds today
• C) borrow £869,565 pounds today
• D) lend £986,754 pounds today

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Definitions:

Tax

A mandatory contribution to state revenue, levied by the government on workers' income and business profits or added to the cost of some goods, services, and transactions.

Burden

A heavy load, often referring to the impact or cost of something on individuals or society.

Buyers

Individuals or entities that purchase goods or services for personal use or for the purpose of reselling.

Sellers

Individuals or entities that offer products or services for sale to buyers in a marketplace.