A US company negotiated a forward contract to buy 100,000 British pounds in 90 days. The company
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A US company negotiated a forward contract to buy 100,000 British pounds in 90 days.
The company was supposed to use the £100,000 to buy British supplies. The 90-day forward rate was \($1.40\) per pound. On the day the pounds were delivered in accordance with the forward contract, the spot rate of the pound was \($1.44.\) What was the real cost of hedging the pound payables in this example?
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Global Corporate Finance Text And Cases
ISBN: 9781405119900
6th Edition
Authors: Suk H. Kim, Seung H. Kim
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