A French company is importing some equipment from Switzerland and will need to pay 10 million Swiss francs three months from now Suppose that the current spot exchange rate is SFr 1 5543 The treasurer of the company expects the franc to appreciate in the next few weeks and is concerned about it The...

a If the treasurer is worried that the franc might appreciate in the next three months she could ...

A French company is importing some equipment from Switzerland and will need to pay 10 million Swiss

Question:

A French company is importing some equipment from Switzerland and will need to pay 10 million Swiss francs three months from now. Suppose that the current spot is €:SFr = 1.5543. The treasurer of the company expects the franc to appreciate in the next few weeks and is concerned about it. The three-month forward rate is €:SFr= 1.5320.
a. Given the treasurer's expectation, what action can he take using the forward contract?
b. Three months later, the spot turns out to be €:SFr = 1.5101. Did the company benefit because of the treasurer's action?
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...