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Your firm is a Swiss exporter of bicycles. You have sold an order to a French firm for 1,000,000 worth of bicycles. Payment from the
Your firm is a Swiss exporter of bicycles. You have sold an order to a French firm for 1,000,000 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. Contract Size Country U.S. $ equiv. Currency per u.s. $ 10,000 Britain (pound) $1.9600 0.5102 interest APR 12 months forward $2.0000 E0.5000 rates 10,000 Euro $1.5600 0.6410 is 18 12 months forward $1.6000 0.6250 i = 28 SFr.10,000 Swiss franc $0.9200 SFr.1.0870 ig 12 months forward $1.0000 SFr.1.0000 ispr. = 41
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