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Suppose that Boeing Corporation exported a Boeing 7 4 7 to Lufthansa and billed Math input error million payable in one year. The money market
Suppose that Boeing Corporation exported a Boeing to Lufthansa and billed Math input error million payable in one year. The money market interest rates and foreign exchange rates are given as follows: The US oneyear interest rate: per annum: The euro zone oneyear interest rate: per annum: The spot exchange rate: Math input error; and The oneyear forward exchange rate: Math input error. Assume that Boeing sells a currency forward contract of Math input error million for delivery in one year, in exchange for a predetermined amount of USdollars. Which of the following isare true? On the maturity date of the contract Boeing will i have to deliver million to the bank the counter party of the forward contractii take delivery of million iii have a zero net euro exposure iv have a profit, or a loss, depending on the future changes in the exchange rate, from this sale. ii and vi and iviiiiii and iviiii and iii
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