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Blake Inc Needs €1,000,000 in 30 Days

Question 8

Multiple Choice

Blake Inc. needs €1,000,000 in 30 days. It can earn 5 percent annualized on a German security. The current spot rate for the euro is $1.00. Blake can borrow funds in the United States at an annualized interest rate of 6 percent. If Blake uses a money market hedge to hedge the payable, what is the cost of implementing the hedge?


A) $1,000,000
B) $1,055,602
C) $1,000,830
D) $1,045,644

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