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Ford, Inc exported a fleet of electric cars worth €5 million to a German company. Payment will be received 12 months from today. A 1-year futures contract is $1.05/€ with a contract size of €250,000. (Points: 2+1) a. How many contracts are needed to hedge the currency risk? b. Long or Short Hedge? c. One year from today, the spot exchange rate becomes $1.15/€. How many $ did Canton gain or lose from hedging this transaction? Ford, Inc exported a fleet of electric cars worth €5 million to a German company. Payment will be received 12 months from today. A 1-year futures contract is $1.05/€ with a contract size of €250,000. (Points: 2+1) a. How many contracts are needed to hedge the currency risk? b. Long or Short Hedge? c. One year from today, the spot exchange rate becomes $1.15/€. How many $ did Canton gain or lose from hedging this transaction?
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Related Book For
Management A Practical Introduction
ISBN: 978-0078112713
5th edition
Authors: Angelo Kinicki, Brian Williams
Posted Date:
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