Samson Inc. needs ?1,000,000 in 30 days. Samsong can earn 6 percent annualized on a German security. The current spot rate for the euro is $1.00. Samson can borrow funds in the U.S. at an annualized interest rate of 5 percent. If Samson uses a money market hedge, how much should it borrow in the U.S.?
A. $952,381.
B. $995,851.
C. $943,396.
D. $995,025.
Answer:B
Samson Inc. needs ?1,000,000 in 30 days. Samsong can earn 6 percent annualized on a German security. The current spot rate for the euro is $1.00. Samson can borrow funds in the U.S. at an annualized interest rate of 5 percent. If Samson uses a money market hedge, how much should it borrow in the U.S.?
A. $952,381. B. $995,851. C. $943,396. D. $995,025.