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( c ) Suffolk Itd negotiated a forward contract to purchase US$ 2 0 0 , 0 0 0 in 9 0 days. The 9
c Suffolk Itd negotiated a forward contract to purchase US$ in days. The days fonward rate was Tk per USS. The purchased dollars wrould be used to procure US supplies. On the day when the dollars were delivered in accordance with the forward contract, the spot rate was TK per USS. i What was the real cost of hedging the payables for this Bangladesh Company? ii If the hedging is expected to be more costly than not hedging, why would a firm even consider hedging? iii What were the other options that Suffolk Ild had to hedge the foreign exchange risk? Explain in brief.
c Suffolk Itd negotiated a forward contract to purchase US$ in days. The days fonward rate was Tk per USS. The purchased dollars wrould be used to procure US supplies. On the day when the dollars were delivered in accordance with the forward contract, the spot rate was TK per USS.
i What was the real cost of hedging the payables for this Bangladesh Company?
ii If the hedging is expected to be more costly than not hedging, why would a firm even consider hedging?
iii What were the other options that Suffolk Ild had to hedge the foreign exchange risk? Explain in brief.
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