A company hedged forward on the FOREX futures market by buying 10 million Euros at EUR/AUD at 0.64 to pay for a BMW delivery in
A company hedged forward on the FOREX futures market by buying 10 million Euros at EUR/AUD at 0.64 to pay for a BMW delivery in Germany. At expiration, in one year, the spot EUR/AUD was 0.625. What were the cash flows?
| a. |
Spot cost of BMWs -$ 15,625,000 Futures payoff -$ 375,000 Net payout -$ 16,000,000
| |
| b. | Spot cost of BMWs $16,000,000 Futures payoff -$ 375,000 Net payout $15,625,000
| |
| c. |
Spot cost of BMWs -$ 16,000,000 Futures payoff +$ 375,000 Net payout -$ 15,625,000
| |
| d. | Spot cost of BMWs -$16,000,000 Futures payoff -$ 375,000 Net payout -$15,625,000
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Authors: Belverd E Needles, Marian Powers
10th Edition
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