Question
The following question gives the information: Intel is scheduled to receive a payment of 100,000,000 in 90 days from Sony in connection with a shipment
The following question gives the information:
Intel is scheduled to receive a payment of 100,000,000 in 90 days from Sony in connection with a shipment of computer chips that Sony is purchasing from Intel. Suppose that the current exchange rate is 103/$, that analysts are forecasting that the dollar will weaken by 1% over the next 90 days, and that the standard deviation of 90day forecasts of the percentage rate of depreciation of the dollar relative to the yen is 4%. Provide a qualitative description of Intels transaction exchange risk.
My question to you is, the question says "the DOLLAR will weaken by 1% over the next 90 days, yet the answers talk about the weakening of the japanese yen versus the dollar. I am so confused, I thought it was the dollar that was weakening against the yen, aka, yen appreciating. Can someone please explain this to me?
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