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Suppose that Boeing Corporation exported atBoeing 747 to Lufthansa and billed 10 million payable in one year. The money market interest rates and foreign exchange
Suppose that Boeing Corporation exported atBoeing 747 to Lufthansa and billed 10 million payable in one year. The money market interest rates and foreign exchange rates are given as follows: Assume that Boeing sells a currency forward contract of 610 miltion for delivery in one year, in exchange for a predetermined amount of US. dollars. Which of the following is/are true? On the maturity date of the contract Boeing will (1) have to dellver 10 million to the bank (the counter party of the forward contrect). (ii) take delivery of $14.6 milition (iii) have a zero net curo exposure (iv) have a profit, or a loss, depending on the future changes in the exchange rate from this Bntish sale
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