Question
Answer the question in details please Assume that Alamor, Inc. of Mesa, Arizona has sld Solar Panels to Timba Distributors in Niger, West Afrin. The
Answer the question in details please
Assume that Alamor, Inc. of Mesa, Arizona has sld Solar Panels to Timba Distributors in Niger, West Afrin. The sale has generated LC 100" go be received in 90 days. (LC means local currency',) The spot rpte is LCIO/$I wMe the 90 day forward rate is LCII/$I, Required: IfAlamor were to entertbe foreign exchange market to mitite currency risk, i.e., fiuctuations, a. Will it buy or sell loal currency? Why? b. If it hedges, what will bethe cost of the c. Ifthe 90forward rate becomes LC13/$1 or LC14/$1, howwould ifaffectthe dollaramount that Alamor would receive? Why? dv Conversely, if the 90 dayforward rate betomes LC$/$I or LC7/$1 orLC6/$1how much would Alamor receive in dollars? Why? e, What conclusions can you derive from yoUrcaJculations? Should AJamorhedge or take an unhedged position? f. What factors contribute to currency fluctuations between trading partners andbow should these variables be analyzed prior to engagng in cross-border trade and investment activities?
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