Question
You are the treasurer for ABC corporation.You just received a bill from your Italian supplier of Genoasalamifor Eur1,00,000. The Euros are duein three months. 1-
You are the treasurer for ABC corporation.You just received a bill from your Italian supplier of Genoasalamifor Eur1,00,000. The Euros are duein three months.
1- What is your underlying exposure? ( Are you longor short Euros? Do you have to do? you owe Euros)
2- If the EURUSD 3 month forward exchange rate is $1.15/EUR today. Tomorrow when you mark your books to market, what is the gain or loss on the underlying position if the EURUSD 3 month forward rate rises to $1.17/EUR?
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Survey of Economics
Authors: Irvin B. Tucker
8th edition
1111989664, 978-1133713357, 1133713351, 978-1111989668
