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?
