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Chronos Time Pieces. Chronos Time Pieces of Boston exports watches to many countries, selling in local currencies to stores and distributors. Chronos prides itself on
Chronos Time Pieces. Chronos Time Pieces of Boston exports watches to many countries, selling in local currencies to stores and distributors. Chronos prides itself on being financially conservative. At least of each individual transaction exposure is hedged, mostly in the forward market, but occasionally with options. Chronos' foreign exchange policy is such that the hedge may be increased up to a hedge if devaluation or depreciation appears imminent. Chronos has just shipped to its major North American distributor. It has issued a day invoice to its buyer for The current spot rate is $ the day forward rate is $ Chronos' treasurer, Manny Hernandez, has a very good track record in predicting exchange rate movements. He currently believes the euro will weaken against the dollar in the coming to days, possibly to around $ a Evaluate the hedging alternatives for Chronos if Manny is right Case : $ and if Manny is wrong Case :$ What do you recommend? b What does it mean to hedge of a transaction exposure? c What would be considered the most conservative transaction exposure management policy by a firm? How does Chronos compare? a Case : Manny is right and the spot rate in days is $ How much in US dollars will Chronos receive in days if of the transaction exposure is hedged with the forward contract? Round to the nearest dollar.
Chronos Time Pieces. Chronos Time Pieces of Boston exports watches to many countries, selling in local currencies to stores and distributors. Chronos prides itself on being financially conservative. At
least of each individual transaction exposure is hedged, mostly in the forward market, but occasionally with options. Chronos' foreign exchange policy is such that the hedge may be increased up to
a hedge if devaluation or depreciation appears imminent. Chronos has just shipped to its major North American distributor. It has issued a day invoice to its buyer for The current spot rate is
$ the day forward rate is $ Chronos' treasurer, Manny Hernandez, has a very good track record in predicting exchange rate movements. He currently believes the euro will weaken against
the dollar in the coming to days, possibly to around $
a Evaluate the hedging alternatives for Chronos if Manny is right Case : $ and if Manny is wrong Case :$ What do you recommend?
b What does it mean to hedge of a transaction exposure?
c What would be considered the most conservative transaction exposure management policy by a firm? How does Chronos compare?
a Case : Manny is right and the spot rate in days is $
How much in US dollars will Chronos receive in days if of the transaction exposure is hedged with the forward contract?
Round to the nearest dollar.
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