Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your company has a 1 million Euro receivable in one year. You decided to fully hedge with forward contracts. The one year forward rate is


Your company has a 1 million Euro receivable in one year. You decided to fully hedge with forward contracts.

The one year forward rate is 1.22 USD/EUR.

How much will you receive in USD in one year?

Note: provide your answers with four decimal points and in millions of USD. Please do the calculations in Excel and round up the results to four decimal points only at the end, once the calculations are completed.




Question 3 

Your company will receive 1 million South African Rand (ZAR) in 3 months. You decided to fully hedge with forward contracts.

The 3-month forward rate is 15 ZAR/USD.

How much will you receive in USD in three months?

Note: provide your answers with four decimal points and in millions of USD. Please do the calculations in Excel and round up the results to four decimal points only at the end, once the calculations are completed.

Step by Step Solution

3.31 Rating (145 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the amount you will receive in USD you need to multiply the amount in the ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Document Format ( 2 attachments)

PDF file Icon
663dc3b367dbd_962345.pdf

180 KBs PDF File

Word file Icon
663dc3b367dbd_962345.docx

120 KBs Word File

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Corporate Finance

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

2nd Canadian edition

978-0134384290, 134384296, 978-0321818171

More Books

Students also viewed these Finance questions

Question

How do financial futures differ from other futures contracts?

Answered: 1 week ago

Question

How does exchange rate risk affect our approach to valuation?

Answered: 1 week ago