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S Spring
S Spring
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The bank wants the total mortgage payment amount in EUR to be hedged against the GBP because income is in the GBP ? That's the correct answer. Buy the EUR/GBP currency pair. For instance, at 10X leverage 25000 EUR holds a 250000 EUR position. That's a 25000 EUR margin deposit plus cushion for volatility.

There is an interest cost of buying the EUR/GBP of 0.75% interest plus about 0.75% in forex commission. Possibly, 3750 EUR rollover-interest per year on 250000 EUR.

The bank wants the total mortgage payment amount in EUR to be hedged against the GBP because income is in the GBP ? That's the correct answer. Buy the EUR/GBP currency pair. For instance, at 10X leverage 25000 EUR holds a 250000 EUR position. That's a 25000 EUR margin deposit plus cushion for volatility.

The bank wants the total mortgage payment amount in EUR to be hedged against the GBP because income is in the GBP ? That's the correct answer. Buy the EUR/GBP currency pair. For instance, at 10X leverage 25000 EUR holds a 250000 EUR position. That's a 25000 EUR margin deposit plus cushion for volatility.

There is an interest cost of buying the EUR/GBP of 0.75% interest plus about 0.75% in forex commission. Possibly, 3750 EUR rollover-interest per year on 250000 EUR.

Source Link
S Spring
S Spring
  • 3.6k
  • 1
  • 7
  • 6

The bank wants the total mortgage payment amount in EUR to be hedged against the GBP because income is in the GBP ? That's the correct answer. Buy the EUR/GBP currency pair. For instance, at 10X leverage 25000 EUR holds a 250000 EUR position. That's a 25000 EUR margin deposit plus cushion for volatility.