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 70% of each individual transaction exposure is hedged, mostly in the forward market, but occasionally with options. Chronos' foreign exchange policy is such that the 70% hedge may be increased up to a 120% hedge if devaluation or depreciation appears imminent. Chronos has just shipped to its major North American distributor. It has issued a 90-day invoice to its buyer for 1,690,000. The current spot rate is $1.2223/, the 90-day forward rate is $1.2272/. 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 90 to 120 days, possibly to around $1.1662/.

Case 1: Manny is right and the spot rate in 90 days is $1.1638/. How much in U.S. dollars will Chronos receive in 90 days if 100% of the transaction exposure is hedged with the forward contract?

How much in U.S. dollars will Chronos receive in 90 days if 70% of the transaction exposure is hedged with the forward contract?

How much in U.S. dollars will Chronos receive in 90 days if 120% of the transaction exposure is hedged with the forward contract?

How much in U.S. dollars will Chronos receive in 90 days if 100% of the transaction exposure is hedged with the forward contract?

How much in U.S. dollars will Chronos receive in 90 days if 70% of the transaction exposure is hedged with the forward contract?

How much in U.S. dollars will Chronos receive in 90 days if 120% of the transaction exposure is hedged with the forward contract?

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