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Stover Coproation, A U.S. based importer, makes a purchase of

Question : Stover Coproation, A U.S. based importer, makes a purchase of : 5128

Stover Coproation, A U.S. based importer, makes a purchase of crystal glassware from a firm in Switzerland for 39,90 Swiss francs, or $24,000, at the spot rate of 1.665 Swiss franc per dollar. The terms of the purchase are net 90 days, and the U.S. firm wants to cover this trade payble with a forward market hedge to eliminate its exchange rate risk. Suppose the firm completes a forward hedge at the 90-day forward rate of 1.682 Swiss francs. If the spot rate in 90 days is actually 1.615 Swiss franc, how much in U.S. dollards will the U.S. frim have saved or lost by hedging its exchange rate exposure? Do not round

a. $916.61

b. $985.60

c. $926.47

d. $1,212.29

e. $965.89

Solution
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Finance 9 Months Ago 100 Views
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