11 Mattel is a U S based company whose sales are roughly two thirds in dollars (Asia and the Americas ) and one third in euros ( Europe ) In September Mattel delivers a large shipment of toys (primarily Barbies and Hot Wheels) to a major distributor in Antwerp The receivable, 30 million, is due in 90 days, standard terms for the toy industry in Europe Mattels treasury team has collected the following currency and market quotes Current spot rate ($ ) $1 4158 Credit Suisse 90 day forward rate ($ ) $1 4172 Barclays 90 day forward rate ($ ) $1 4195 Mattel Toys WACC ($) 9 600 90 day eurodollar interest rate 4 000 90 day euro interest rate 3 885 90 day eurodollar borrowing rate 5 000 90 day euro borrowing rate 5 000 The companys foreign exchange advisors believe the euro will be at about $1 4200 in 90 days Mattels management does not use currency options in currency risk management activities Advise Mattel on which hedging alternative is probably preferable out of the following three a) remaining uncovered, b) hedge using forward contracts or c) hedge with a money market hedge

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11. Mattel is a U.S.-based company whose sales are roughly two-thirds in dollars (Asia and the Americas ) and one-third in euros ( Europe ).

11. Mattel is a U.S.-based company whose sales are roughly two-thirds in dollars (Asia and the Americas) and one-third in euros (Europe). In September Mattel delivers a large shipment of toys (primarily Barbies and Hot Wheels) to a major distributor in Antwerp. The receivable, 30 million, is due in 90 days, standard terms for the toy industry in Europe. Mattels treasury team has collected the following currency and market quotes.

Current spot rate ($/)		$1.4158
Credit Suisse 90-day forward rate ($/)		$1.4172
Barclays 90-day forward rate ($/)		$1.4195
Mattel Toys WACC ($)		9.600%
90-day eurodollar interest rate		4.000%
90-day euro interest rate		3.885%
90-day eurodollar borrowing rate		5.000%
90-day euro borrowing rate		5.000%

The companys foreign exchange advisors believe the euro will be at about $1.4200/ in 90 days. Mattels management does not use currency options in currency risk management activities. Advise Mattel on which hedging alternative is probably preferable out of the following three: a) remaining uncovered, b) hedge using forward contracts or c) hedge with a money markethedge.