2.99 See Answer

Question: Mithras plc is a UK business that


Mithras plc is a UK business that is due to receive €200,000 from a German customer in three months’ time. A money market hedge will be used to manage currency risk and the following borrowing rates are available:
Country ………. Borrowing rate per year
Germany ………………………………….. 16%
UK …………………………………………… 10%
The spot rate is £1 = €1.18 - 1.19.

Required:
What is the sterling amount which Mithras plc will need to deposit now as part of the money market hedge?


2.99

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