Question
1. Sarah is now in the Singapore airport and has 7500 Singapore dollars in her pocket. Sarah is next going to the Czech Republic and
1. Sarah is now in the Singapore airport and has 7500 Singapore dollars in her pocket. Sarah is next going to the Czech Republic and needs Czech Koruna. How many Koruna will she be able to exchange if the "in USD" Singapore Dollar exchange rate is 0.790 and the "in USD" Czech exchange rate is 0.047.
2. Exxon Oil Corp. is negotiating the purchase of 1 million barrels of oil from a bankrupt competitor to be delivered and paid for in exactly 1 year. The oil exporter wants the contract expressed in Mexican Pesos, and the current "in USD" Peso exchange rate is $0.077. The contract is signed at a price of 1415 Pesos per barrel. Exxon can enter a futures contract that allows the company to purchase Pesos at the exact time of oil delivery at $0.078. If we consider the use of the futures contract to hedge Exxon's foreign exchange risk, how much is the cost of this insurance to Exxon?
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