Cornell Co purchases computer chips denominated in euros on a monthly basis from a Dutch supplier To hedge its exchange rate risk, this U S firm negotiates a 3 month forward contract 3 months before the next order will arrive In other words, Cornell is always covered for the next three monthly ship...

No Cornell is exposed to exchange rate risk over tim ...

Cornell Co. purchases computer chips denominated in euros on a monthly basis from a Dutch supplier. To

Question:

Cornell Co. purchases computer chips denominated in euros on a monthly basis from a Dutch supplier. To hedge its risk, this U.S. firm negotiates a 3-month forward contract 3 months before the next order will arrive. In other words, Cornell is always covered for the next three monthly shipments. Because Cornell consistently hedges in this manner, it is not concerned with movements. Is Cornell insulated from movements? Explain.

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...