Assume that interest rate parity exists. The annualized interest rate is presently 5 percent in the United States for any term to maturity, and is 13 percent in Mexico for any term to maturity. Dokar Co. (a U.S. firm) has an agreement in which it will develop and export soft ware to Mexico’s government 2 years from now, and will receive 20 million Mexican pesos in 2 years. The spot rate of the peso is $.10. Dokar uses a 2-year forward contract to hedge its receivables in 2 years. How many dollars will Dokar Co. receive in 2 years? Show your work.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.