Dell Computer Has a £1 Million Receivable That It Expects

question 20

Multiple Choice

Dell 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:

U.S. Marine Corps.

A branch of the United States Armed Forces responsible for providing power projection, using the mobility of the U.S. Navy to rapidly deliver combined-arms task forces.

Distributor

A type of reseller or marketing intermediary that resells manufactured products without significantly altering their form. Distributors often buy from manufacturers and sell to other businesses like retailers in a B2B transaction.

Supermarkets

Large retail stores offering a wide variety of food and household products, organized into aisles.

Straight Rebuy Order

A routine purchase transaction in which a business reorders a product without any modifications to the specifications or terms.