Question
A Japanese importer has a $1,250,000 payable due inone year. Spot exchange rates 1-year Forward Rates Contract size $1.00 = 100 $1.00 = 120 12,500,000
A Japanese importer has a $1,250,000 payable due inone year.
Spot exchange rates | 1-year Forward Rates | Contract size |
$1.00 = 100 | $1.00 = 120 | 12,500,000 |
Detail a strategy using forward contracts that will hedge his exchange rate risk.
A) Go short in 12 yen forward contracts.
B) Go long in 12 yen forward contracts.
C) Go short in 16 yen forward contracts.
D) none of the options
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Quantitative Methods for Business
Authors: David R. Anderson, Dennis J. Sweeney, Thomas A. Williams, Jeffrey D. Camm, James J. Cochran
13th edition
1285866312, 978-0357685648, 978-1285866314
