1. On August 1st, Marriot Co. ordered raw material from France and agreed to pay 100 million euros for this order on November 1st. It negotiated a 3-month forward contract to obtain 100 million euros on that date at $1.25 per euro. On September 1st, the French firm informed Marriot Co. that it won't be able to fulfill that order. The euro spot rate on September 1st is $1.24 and 2-month forward rate exhibits a 2% discount. To offset its existing contract, Marriot Co. will negotiate a forward contract to ____ for the date of November 1st and the profit/loss generated from this transaction is a ____ U.S. dollars.
2. The one-year forward rate of Euro is quoted at $1.16/euro, and the spot rate of euro is quoted at $1.12/euro. The forwardispercent.
3. Hilton Co. is expecting to receive 800,000 New Zealand dollars in one year. Hilton expects the spot rate of New Zealand dollar to be $0.70 in a year, so it decides to avoid exchange rate risk by hedging its receivables. The spot rate of the New Zealand dollar is quoted at $0.80. The one-year forward rate exhibits a 10% discount.How does Hilton Co. use forward contracts to hedge the exchange rate risk for the 800,000 New Zealand dollars receivables and how many U.S. dollars Hilton Co. will receive?
4. On 1/24 at the end of the day, you sold (took a short position in) 1 futures contract (one contract is agreement to buy or sell Euros 45,500) at a rate of USD 1.35 per Euro, contract expires on 3/18. Initial margin=$1,330 and maintenance margin is $1,005. On 1/25 and 1/26, the futures rate expiring on 3/18 is USD 1.365, and USD 1.370 respectively. As per "Marked to Market" daily mechanism of currency futures contracts, what shall be your margin account balance at the end of 1/25(Assuming that you'll not withdraw money from your margin account)?
5. Continued from the above question, what was your margin account balance at the end of 1/26(Assuming that you'll not withdraw money from your margin account)?
6. 1.40 per Canadian dollar, i.e., 1.40/C$, quoted in Canada (C$ stands for Canadian dollar and stands for euro) is
7. Assume an Austria firm has to pay for Thailand imports in 90 days. It expects that Thai Baht will depreciate, but it still wants to hedge its risk. What type of hedging is more appropriate in this situation?
8. If a British firm desires to avoid the risk from exchange rate fluctuations, and it will receive $120,000 in 60 days from its business client in the U.S., it could:
9. Assume 1 Euro is equal to $1.15 and 1 New Zealand dollar is equal to $.65. What is the value of the New Zealand dollar in Euros?