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16. DEC is asked to quote a price in Belgian francs for computer sales to a Belgian company. The computers will be paid for in
16. DEC is asked to quote a price in Belgian francs for computer sales to a Belgian company. The computers will be paid for in four equal, quarterly installments, beginning 90 days from now. DEC requires a minimum price of $2.5 million to accept this contract. Suppose the spot and forward rates for the Belgian franc are as follows: Spot 90-Day 180-Day 270-Day 360-Day $0.0307 $0.0302 $0.0298 $0.0293 $0.0287 What is the minimum Belgian franc price that DEC should quote for this order? a. b. c. d. ANSWER: BF 82,781,457 BF 87,108,014 BF 81,433,225 BF 84,745,763 d: forward market hedge
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