Question
Discuss the alternatives that Jones has in hedging its net positions in each currency. Which one you would choose for each currency based on the
Discuss the alternatives that Jones has in hedging its net positions in each currency. Which one you would choose for each currency based on the information shown and additional research you conduct.
| Currency | Total Inflow | Total Outflow | Total Inflow in USD | Total Outflow in USD | Net Foreign Exchange Exposure in USD |
| Australia Dollars (A$) | 33,000,000 | $ 3,000,000 | $ 30,030,000 | $ 2,730,000 | $ 27,300,000 |
| Canada Dollars (C$) | 6,000,000 | $ 2,000,000 | $ 3,660,000 | $ 1,220,000 | $ 2,440,000 |
| Argentina Pesos (AP) | 12,000,000 | $ 11,000,000 | $ 2,280,000 | $ 2,090,000 | $ 190,000 |
| Taiwan Dollars (T$) | 5,000,000 | $ 9,000,000 | $ 3,300,000 | $ 5,940,000 | $ (2,640,000) |
| Currency | Spot Rate | One-Year Forward Rate |
| A$ | $ 0.91 | $ 0.94 |
| C$ | $ 0.61 | $ 0.60 |
| AP | $ 0.19 | $ 0.16 |
| T$ | $ 0.66 | $ 0.65 |
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The Geography Of Finance
Authors: Gordon L. Clark, Darius Wójcik
1st Edition
0199213364, 978-0199213368
