Question
Company X enters into a forward contract to hedge against the foreign currency risk associated with a future purchase of equipment costing 100,000. The forward
Company X enters into a forward contract to hedge against the foreign currency risk associated with a future purchase of equipment costing €100,000. The forward contract specifies a forward rate of $1.10/€, and the spot rate at year-end is $1.05/€. Calculate the gain or loss on the forward contract.
Transaction | Amount |
Forward Rate | $1.10/€ |
Spot Rate (Year-end) | $1.05/€ |
Transaction Amount (in euros) | €100,000 |
Gain/Loss on Forward Contract |
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Global Corporate Finance Text And Cases
Authors: Suk H. Kim, Seung H. Kim
6th Edition
140511990X, 9781405119900
