Question
A car dealer in U.S. expects a delivery of new Honda Civics from Japan in 3 months. The price is fixed in Japanese yen. The
A car dealer in U.S. expects a delivery of new Honda Civics from Japan in 3 months. The price is fixed in Japanese yen. The dealer can eliminate the exchange risk if he hedges by
Exchanging $ for yen at the spot rate and investing the proceeds in Japan | ||
Selling forward yen for $ | ||
Buying forward yen for $ | ||
"He can do either (A) or (C), both would work" | ||
There is no exchange risk for the dealer |
Step by Step Solution
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Step: 1
The detailed answer for the above question is provided below The correct answer is C Buying forward ...
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International Financial Management
Authors: Cheol Eun, Bruce Resnick
7th Edition
0077861604, 9780077861605
