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Your company will receive 1,250,000 in four months. When you calculate that the break-even...

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Finance

Your company will receive 1,250,000 in four months. When you calculate that the break-even interest rate that makes you indifferent between money market hedge and forward contract (forward hedge) you find that it is 3%. If the interest rate is 3.5%, then forward contract (forward hedge) is more profitable for you than the money market hedge.

True

False

A US company needs to pay 750,000 to a British company in UK 6 months later. If this US company chooses the option hedge then the company needs to be a buyer of a put option.

True

False

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