Question
Your firm is a Swiss exporter of bicycles. You have sold an order to a French firm for 2,000,000 worth of bicycles. Payment from the
Your firm is a Swiss exporter of bicycles. You have sold an order to a French firm for 2,000,000 worth of bicycles. Payment from the French firm (in euro) is due in 12 months. Use a money market hedge to redenominate this one-year receivable into a Swiss franc -denominated receivable with a one-year maturity.
| Pair | Int rates | ||
| GBP/USD | Spot | 1.3065 | 2.5% UK |
| 12M FWD | 1.3174 | ||
| EUR/USD | Spot | 1.1289 | 3% Euro zone |
| 12M FWD | 1.1373 | ||
| USD/CHF | Spot | 0.9338 | 0.8% Swiss |
| 12M FWD | 0.9438 | ||
| USD | 3.4% |
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
13th edition
1439078106, 111197375X, 9781439078105, 9781111973759, 978-1439078099
