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One company in the US knows that it will have to pay 30 million euros in three months. The current exchange rate is $ 1.08
One company in the US knows that it will have to pay 30 million euros in three months. The current exchange rate is $ 1.08 per euro. a. At what risk is the company exposed? b. Explain how she could use forward contracts to hedge her report. c. Explain how she could use Futures to offset her report. d. If it had decided to hedge its position on forward contracts, when would it have made a profit and when had it lost? e. What are the similarities and differences between these two hedging strategies?
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