Question
Spot Rate $1.12 $1.13Forward Rate $1.12 $1.13 On December 15, the Chiquita Company, a company based in Ecuador, sells bananas to a company in Italy
Spot Rate $1.12 $1.13Forward Rate $1.12 $1.13
On December 15, the Chiquita Company, a company based in Ecuador, sells bananas to a company in Italy and expects to receive 1 million euro on March 15. The currency used in Ecuador is the US dollar. On December 15, Chiquita hedges the receivable with a forward contract with a delivery date of March 15. On December 15, the following are quotes for the euro.
12/15Bid Ask
| Spot Rate | $1.07 | $1.08 |
| Forward Rate | $1.11 | $1.12 |
The forward rate is for a forward contract with a March 15 delivery date. On March 15, the following are quotes for the euro.
3/15 Bid Ask
The forward rate is for a forward contract with a March 15 delivery date.
What is Chiquitas net cash flow in dollars on December 15? On March 15?
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Handbook Of Quantitative Finance And Risk Management
Authors: Cheng-Few Lee, John Lee
2010th Edition
0387771166, 978-0387771168
