.11 Verizon 7:07 PM PROBLEM 1-Questions 31-32 U.S 656 5% Jordan 5% 490 360-day b

Question

.11 Verizon 7:07 PM PROBLEM 1-Questions 31-32 U.S 656 5% Jordan 5% 490 360-day borrowing rate 360-day deposit rate Refer to the interest rate Exhibit above. Perkins Corp. will receive 250,000 Jordanian dinar (JOD) in 360 days. The current spot rate of the dinar is $1.48, while the 360-day forward rate is $1.50. How much will Perkins receive in 360 days from implementinga money market hedge (assume any receipts before the date of the receivable are invested)? $377,115 $373,558. $363,019. O$370,000. 10 points Save Answer

Explanation / Answer

Solution 31 Perkins will borrow in Jordan =250000/(1+5%)    238,095.24 This will be converted back to US dollars at current spot rate @ 1.48 Equivelent USD =238095.24*1.48    352,380.96 This is invested in US so amount received after 360 days =352380.96*(1+5%)          370,000 So option D is correct Solution 32 Pablo will borrow in US =150000/(1+4%) so Krone to be deposited in Jorden 144230.769 This will be converted back to US dollars at current spot rate @ 1.48 Equivelent USD =144230.77*1.48 213461.54 Amount payable of this loan after 360 days =213461.54*(1+6%)          226,269 So option B is correct

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