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On 1/10/2020, Tariq. Ins (Jordanian company) purchased a goods of $2,500,000 on account from MC. Co (U.S.A company). The outstanding amount is due to be
On 1/10/2020, Tariq. Ins (Jordanian company) purchased a goods of $2,500,000 on account from MC. Co (U.S.A company). The outstanding amount is due to be paid on 1/5/2021. To avoid unexpected losses that may result from the fluctuation of foreign currency Tariq Ins, signed a hedging contract with Arab Bank to purchase the due amount at exchange rate of 720 at the 1/5/2021. The exchange rate of Dollar with respect to Jordanian Dinar were as follow: Date Rate 1/10/2020 .700 31/12/2020 (FS) .730 1/5/2021 710 This will result in: Select one: a. 25000 of hedging premium b. 25000 of hedging discount C d. 50000 of hedging premium
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