7. Spot Rate $1= SGD 1.75 3 months Forward Rate $1= SGD 1.80 12 months Forward Rate $1= SGD 2.00 Annual Interest Rates Singapore iSGD = 6.00% US 4.00% Boeing, a U.S. company, sold an aircraft to Singapore Airlines and billed SGD 500 million in 3 months in other words, Boeing has SGD 500 million receivables in three months). Boeing is concerned with the U.S. dollar proceeds from international sales and would like to control exchange risk. a) Briefly explain the foreign currency risk for Boeing. Solution: b) (4 points) Do a forward hedge. Indicate whether to buy or sell SGD forward. Solution