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3. A U.S. multinational, Hoola Hoopa, Inc., hired a Canadian IT consulting firm to update its internal network. In 6 months, when the contract is
3. A U.S. multinational, Hoola Hoopa, Inc., hired a Canadian IT consulting firm to update its internal network. In 6 months, when the contract is over, Hoola Hoopa will need 1.5 million Canadian dollars to pay the consultants. The company needs to decide whether or not it should enter into a forward contract to hedge its exchange rate risk. Fill in the answers below using the USS Equivalent rates (S/CS) listed in the table below U.S. $ Equivalent Currency per U.S.S Country Canada (Dollar) 1-month forward 3-months forward 6-months forward 0.6879 0.6868 0,6844 0.6803 1.4537 1.4560 1.4611 1.4699 Unhedged Potential Gains/Losses in USS Spot Rate in 6 months Position Hedged Position from Hedge 0.6521 0.6700 0.6803 0.6850 0.6900
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