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Canada Canned Goods has purhcased 2,000 tonnes of corn from the Golden Corn Company in France at 120 euros per tonne and payable in one
Canada Canned Goods has purhcased 2,000 tonnes of corn from the Golden Corn Company in France at 120 euros per tonne and payable in one year. The current spot rate is 1.4675 (C\$/euro) and the 1-year forward is 1.4572. The financial analyst at Canada Canned Goods suggests that the spot rate in one year will be 1.3155. Interest rates in Canada are currently 3.50 percent for 1 year and 3.8 percent in France. Required: a) Outline with calculations three alternative actions available to Canada Canned Goods to handle its foreign exchange exposure. (10 marks) b) Advise the company which alternative they should take, providing the reason for your recommendation ( 2 marks) Enter calculation and answers here
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