Problem 10-11 (algorithmic) Question Help Chronos Time Places, Chronos Time Pieces of Boston exports Watches to many countries, selling in local currencies to stores and distributors Chronos prides on being financial conservative At least 70% of each individual transaction exposure is hedged, mostly in the forward market but occasionally with option. Chronos foreign exchange policy is such that the foss hediye may be increased up to 120% hedge if evaluation or depreciation appears inminent. Chronos has just shipped to its major North American distributor It has sued a 10-day invoice to the buyer for 61.540.000. The current spot rate is 51.22271, the 90-day forward rate is $1.2274 Clonos trasurer, Manny Hemandez, has a very good track record in predicting exchange rate movements. He currey believes the euro wil weken on the color in the comng 0 to 120 day possibly to around 51.1673% Evo he hedging ahorative for Chrono Manny is right (Case 1:51.107) and if Manny is wrong (Case 2 51212/What do you recommend b. Wat does it mean to bodge 120% of a transaction exposure? What would be considered the most conceive transaction exposure management policy by a fom? How does Chronos compare? a. Manny is right and the spot rate in 90 days is $1.1678 How much in US dollars will Chronos receive in 90 days 100% of the transaction exposure is hedged with the forward contract) (Round to the nearest dollar) HW Score: 37.5%, 12 of 32 pts Problem 10-11 (algorithmic) Question Help Chronos Time Pieces. Chronos Time Pieces of Boston exports Watches to many countries, selling in local currencies to stores and distributors. Chronos prides itself on being financially conservat AT0% of each individual transaction exposure is hedged, mostly in the forward market, but occasionally with options. Chronos' foreign exchange policy is such that the 70% hedge may be increased up to a 120% hedge if devaluation or depreciation appears imminent. Chronos has just shipped to its major North American distributor has issued a day woice to the buyer for 1,540.000. The current spot rate is 5122271, the 30-day forward rate is $1.2274. Chronos treasurer, Manny Hernandez, has a very good track record in predicting exchange rate movements. He currey believes the euro wil wea con against the dollar in the coming 90 to 120 days, possibly to around $1. 1673 Evaluate the hedging alternatives for Chronos i Manny is right (Case 1: $11673) and if Manny is wrong (Case 2 $1.2092/63 What do you recommend? b. What does it mean to hedge 120% of a transaction exposure? c. What would be considered the most conservative transaction exposure management policy by a fem? How does Chronos compare? a. Mann is right and the spot rate in 90 days is $1.1673/ How much in US dollars wil Chronos recole in 90 days if 100% of the transaction exposure is hedged with the forward contract? (Round to the nearest dollar) Problem 10-11 (algorithmic) Question Help Chronos Time Places, Chronos Time Pieces of Boston exports Watches to many countries, selling in local currencies to stores and distributors Chronos prides on being financial conservative At least 70% of each individual transaction exposure is hedged, mostly in the forward market but occasionally with option. Chronos foreign exchange policy is such that the foss hediye may be increased up to 120% hedge if evaluation or depreciation appears inminent. Chronos has just shipped to its major North American distributor It has sued a 10-day invoice to the buyer for 61.540.000. The current spot rate is 51.22271, the 90-day forward rate is $1.2274 Clonos trasurer, Manny Hemandez, has a very good track record in predicting exchange rate movements. He currey believes the euro wil weken on the color in the comng 0 to 120 day possibly to around 51.1673% Evo he hedging ahorative for Chrono Manny is right (Case 1:51.107) and if Manny is wrong (Case 2 51212/What do you recommend b. Wat does it mean to bodge 120% of a transaction exposure? What would be considered the most conceive transaction exposure management policy by a fom? How does Chronos compare? a. Manny is right and the spot rate in 90 days is $1.1678 How much in US dollars will Chronos receive in 90 days 100% of the transaction exposure is hedged with the forward contract) (Round to the nearest dollar) HW Score: 37.5%, 12 of 32 pts Problem 10-11 (algorithmic) Question Help Chronos Time Pieces. Chronos Time Pieces of Boston exports Watches to many countries, selling in local currencies to stores and distributors. Chronos prides itself on being financially conservat AT0% of each individual transaction exposure is hedged, mostly in the forward market, but occasionally with options. Chronos' foreign exchange policy is such that the 70% hedge may be increased up to a 120% hedge if devaluation or depreciation appears imminent. Chronos has just shipped to its major North American distributor has issued a day woice to the buyer for 1,540.000. The current spot rate is 5122271, the 30-day forward rate is $1.2274. Chronos treasurer, Manny Hernandez, has a very good track record in predicting exchange rate movements. He currey believes the euro wil wea con against the dollar in the coming 90 to 120 days, possibly to around $1. 1673 Evaluate the hedging alternatives for Chronos i Manny is right (Case 1: $11673) and if Manny is wrong (Case 2 $1.2092/63 What do you recommend? b. What does it mean to hedge 120% of a transaction exposure? c. What would be considered the most conservative transaction exposure management policy by a fem? How does Chronos compare? a. Mann is right and the spot rate in 90 days is $1.1673/ How much in US dollars wil Chronos recole in 90 days if 100% of the transaction exposure is hedged with the forward contract? (Round to the nearest dollar)