On June 17 of a particular year, an American watch dealer decided to import 100,000 Swiss watches Each watch costs SF225 The dealer would like to hedge against a change in the dollar Swiss franc exchange rate The forward rate was $0 3881 Determine the outcome from the hedge if it was closed on Augu...

The exposure is to 100000SF225 SF22500000 The dealer would like to lock in the c ...

On June 17 of a particular year, an American watch dealer decided to import 100,000 Swiss watches.

Question:

On June 17 of a particular year, an American watch decided to import 100,000 Swiss watches. Each watch costs SF225. The would like to hedge against a change in the dollar/Swiss franc exchange rate. The forward rate was $0.3881. Determine the outcome from the hedge if it was closed on August 16, when the spot rate was $0.4434?
Dealer
A dealer in the securities market is an individual or firm who stands ready and willing to buy a security for its own account (at its bid price) or sell from its own account (at its ask price). A dealer seeks to profit from the spread between the...