Question
Suppose that a US-based company plans to purchase goods from a Japanese supplier, and the agreed price is 120 million yen. The company has to
Suppose that a US-based company plans to purchase goods from a Japanese supplier, and the agreed price is 120 million yen. The company has to convert US dollars (USD) into Japanese yen (JPY) to pay for the goods. The spot exchange rate is 1 USD = 100 JPY. The company can use a 3-month forward contract to lock in the exchange rate at 1 USD = 110 JPY. If the company uses a forward contract to hedge its currency risk, what will be the cost of the goods in USD, assuming the forward rate is unbiased?
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Spreadsheet Modeling And Decision Analysis A Practical Introduction To Management Science
Authors: Cliff T. Ragsdale
5th Edition
324656645, 324656637, 9780324656640, 978-0324656633
