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The Tiffany Corporation, a U . S . based importer, makes a purchase of crystal glassware from a firm in Switzerland for 3 9 ,
The Tiffany Corporation, a US based importer, makes a purchase of crystal glassware from a firm in Switzerland for Swiss francs, or $ at the spot rate of Swiss francs per dollar. The terms of the purchase are net days, and the US firm wants to cover this trade payable with a forward market hedge to eliminate its exchange rate risk. Suppose the firm completes a forward hedge at the day forward rate of Swiss francs. If the spot rate in days is actually Swiss francs, how much in US dollars will the US firm have saved or lost by hedging its exchange rate exposure?
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