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Boeing sold an airplane to Air India for Rs. 1000M. Boeing will receive payments in Indian Rupee. The spot exchange rate is $1 = Rs.
Boeing sold an airplane to Air India for Rs. 1000M. Boeing will receive payments in Indian Rupee. The spot exchange rate is $1 = Rs. 20. The payment will be received 3 months from today.
a. If the exchange rate for Indian Rupees is Rs. 25/$ after 3 months what is the potential transaction gain or loss for Boeing?
b. If the exchange rate is Rs. 18/$ after 3 months what is the potential transaction gain or loss for Boeing
c. How would you expect Boeing to hedge this transaction?
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