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Grand Tour Co. buys IT products from a Swedish company. Grand Tour Co. is based in California, U.S.A. The IT products that it buys are

Grand Tour Co. buys IT products from a Swedish company. Grand Tour Co. is based in California, U.S.A. The IT products that it buys are denominated in euros. Grand Tour Co. hedges its exchange rate risk by negotiating six-month contracts. It negotiates a new six-months contract, six months before the next order will arrive. Grand Tour Co. is always covered for the next six-monthly shipments. The CFO of Grand Tour Co. is not concerned about changes in the value of the euro, because he does this hedging. Is Grand Tour Co. fully insulated from exchange rate movements?

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