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The US firm, Cray Research sold a supercomputer to the Max Planck Institute in Germany on credit and invoiced 12.8million payable in six months. Currently,
The US firm, Cray Research sold a supercomputer to the Max Planck Institute in Germany on credit and invoiced 12.8million payable in six months. Currently, the six-month forward exchange rate is $1.24 = 1. a. Is Cray worried about the euro appreciating or depreciating? Explain b. What will be the future value in dollars if Cray hedges 100% with a forward hedge? c. If in six months, the spot rate turns out to be $1.19 = 1, would Cray be happy that it had used the forward hedge? d. How much better (or worse) off would Cray have been without the hedge? D
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