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    Translation exposure; interest rate parity

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    A perfect hedge (full coverage) on translation exposure can usually be achieved when:
    using the money market hedge.
    using the forward hedge.
    using the futures hedge.
    none of the above, since a perfect hedge is nearly impossible.

    Assume that the U.S. interest rate is 10%, while the British interest rate is 15%. If interest rate parity exists, then:
    British investors who invest in the United Kingdom will achieve the same return as U.S. investors who invest in the U.S.
    U.S. investors will earn a higher rate of return when using covered interest arbitrage than what they would earn in the U.S.
    U.S. investors will earn 15% whether they use covered interest arbitrage or invest in the U.S.
    U.S. investors will earn 10% whether they use covered interest arbitrage or invest in the U.S.

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    https://brainmass.com/business/interest-rates/translation-exposure-interest-rate-parity-41084

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    A perfect hedge (full coverage) on translation exposure can usually be achieved when:

    Ans - none of the above, since ...

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