Use the following exchange rates to answer questions 16 - 20. How many Swiss Francs can you get with 1,000 US Dollars?

Rate Table1 US Dollar

US Dollar

1.00 USD

Inv. 1.00 USD

Euro

0.849341

1.177384

British Pound

0.767078

1.303649

Indian Rupee

63.646822

0.015712

Australian Dollar

1.261092

0.792963

Canadian Dollar

1.264788

0.790646

Singapore Dollar

1.366360

0.731872

Swiss Franc

0.972909

1.027845

Malaysian Ringgit

4.280730

0.233605

Japanese Yen

110.678297

0.009035

Chinese Yuan Renminbi

6.728534

0.148621

Forward Contracts

B. Pounds per 1$

30 days

BP 0.75432/$

60 days

BP 0.73458/$

90 days

BP 0.71997/$

$ 102.28

SF 97.29

SF 1,027.85

SF 972.909

6 points

QUESTION 17

You have decided to set up an export business. You will be exporting handmade furniture to Great Britain. The importer has agreed to pay you in British Pounds. For your first shipment of beds, the importer will pay you today British Pounds 50,000. How much will you make in US dollars?

$65,182

$38,354

$7,671

$13,036

6 points

QUESTION 18

Referring to question 17, suppose you are not paid immediately. Instead, the importer agrees to pay in 60 days. What can you do to hedge your position if you are not paid for 60 days?

Buy an option

Lock in a forward contract

Pay for the beds now instead of 60 days

Buy an insurance contract

6 points

QUESTION 19

Referring to question 17, how much will it cost you if you hedge?

$36,729

$68,066

BP68,066

BP36,729

6 points

QUESTION 20

You have 1,000 Euros. How many Indian Rupees will this buy?

IR 63,647

E 849.34

IR 74,936.75

IR 1177.3