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Parker Company, a U.S. MNC, will receive AUD200,000 in 360 days. Assume that the 360-day interest...

Parker Company, a U.S. MNC, will receive AUD200,000 in 360 days. Assume that the 360-day interest rate in the United States is 1% and in Australia 3%. Assume the forward rate of the Australian dollar is USD0.50/AUD and the spot rate of the Australian dollar is USD0.48/AUD. If Parker Company uses a forward hedge, it will receive ____ in 360 days.

USD 94,136.

USD 93,204.

USD 100,000.

None of the answers is correct.

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Answer #1

Answer:

The forward rate of the Australian dollar is USD0.50/AUD.

That 1 USD = .50 AUD.

The amount the parker company will receive in 360 days under forward hedging.

The parker will receive AUD 200,000* .50 = USD 100,000.

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