Question
As the owner of a multinational enterprise (MNE) located in Malaysia, you believe the ringgit (MYR) will depreciate further against UD dollar in the coming
As the owner of a multinational enterprise (MNE) located in Malaysia, you believe the ringgit (MYR) will depreciate further against UD dollar in the coming six (6) months. Assume today is 20 March 2020, your MNE in Malaysia has just bought fabrics from a U.S. company, with payment of $1 million due in 6 months. Given the current spot rate (MYR/USD) quoted in the above newspaper article, the six-month forward rate is MYR/USD 4.4252-4270, and you expect the spot rate to reach MYR/USD 4.4340-4357 in the coming six months, calculate the implicit gains or losses on this position in MYR.
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Financial Accounting Tools for Business Decision Making
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
5th Edition
9781118560952, 1118560957, 978-0470239803
