Suppose you hedge a 100,000 Canadian dollar 3-month receivable using a forward contract on only 50,000 Canadian dollars at a forward price of C1.3245 (USDCAD)? What is the hedged value of the receivable if the USDCAD is C1.20 or C1.40 in 3 months? The USD hedged value includes both the USD value of the entire receivable and the profit from a financially-settled forward contract. Hint: This is a 50% coverage ratio (only covering 50% of the exposure using a forward). The hedged value is the unhedged value on entire quantity and payoff on forward contract.

10. Suppose you hedge a 100,000 Canadian dollar 3-month receivable using a forward contract on only 50,000 Canadian dollars at a forward price of C1.3245 (USDCAD)? What is the hedged value of the receivable if the USDCAD is C1.20 or C1.40 in 3 months? The USD hedged value includes both the USD value of the entire receivable and the profit from a financially-settled forward contract. Hint: This is a 50% coverage ratio (only covering 50% of the exposure using a forward). The hedged value is the unhedged value on entire quantity and payoff on forward contract. Receivable (CAD) 100,000 Forward Contract Quantity (CAD) 50,000 Forward Price (USDCAD) Hedged Value if rate is C1.20 in 3-mo ??? Hedged Value if rate is C1.40 in 3-mo ??? 1.3245