In 1996, DEC hedges a FF 3.2 million receivable due in 180 days. The current spot rate is FF 1 = $0.1873-88 and the 180 day forward rate is FF 1 = $0.1862-69. If the spot rate at the end of 180 days is $0.1879-95, how much has the forward market hedge cost DEC? If instead of AR, DEC has an AP of FF 3.2 million due in 180 days, how much will the forward hedge cost (benefit) it?

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SOLUTION To calculate the cost of the forward market hedge for DEC we need to compare the outcomes o... View the full answer