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German Company Is Evaluating Alternatives to Hedge US1M Payable in Three

Question 35

Multiple Choice

German company is evaluating alternatives to hedge US1M payable in three months. A money market hedge for this transaction will be


A) raising Euro denominated short term loan at annual interest rate of 2%.
B) investing in dollar denominated short term government security yielding 0.2%.
C) one cannot hedge payable with money market hedge
D) there is no need to hedge since the US dollar has been constantly appreciating against the Euro in the past three months.

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