(b) (c) You want to hedge a large exposure in Renminbi (RMB). Suppose both currency forwards...
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(b) (c) You want to hedge a large exposure in Renminbi (RMB). Suppose both currency forwards and futures are available for RMB. (ii) State the circumstances under which you may want to use forwards instead of futures. What key advantages do futures have over forward contracts ? (3 marks) (2 marks) An importer with €25 million payable in 90 days wants to hedge his exposure. He has the following information: (1) (11) MYRE spot rate - RM3.95/€ MYR € 60-day forward rate= RM3.89 € MYR € 90-day forward rate= RM3.80 € Based on the above quotes, what is the market's expectation about the € relative to the Malaysian Ringgit? (2 marks) State the hedge strategy using forwards with which the exporter can protect himself. (1 mark) If the importer were to ask your opinion on appropriate strategy what would you advise (b) (c) You want to hedge a large exposure in Renminbi (RMB). Suppose both currency forwards and futures are available for RMB. (ii) State the circumstances under which you may want to use forwards instead of futures. What key advantages do futures have over forward contracts ? (3 marks) (2 marks) An importer with €25 million payable in 90 days wants to hedge his exposure. He has the following information: (1) (11) MYRE spot rate - RM3.95/€ MYR € 60-day forward rate= RM3.89 € MYR € 90-day forward rate= RM3.80 € Based on the above quotes, what is the market's expectation about the € relative to the Malaysian Ringgit? (2 marks) State the hedge strategy using forwards with which the exporter can protect himself. (1 mark) If the importer were to ask your opinion on appropriate strategy what would you advise
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Hedging Strategies with Forwards and Futures a Forwards vs Futures for RMB Hedging You might prefer forwards over futures for RMB hedging in the follo... View the full answer
Related Book For
Auditing The Art and Science of Assurance Engagements
ISBN: 978-0133405507
13th Canadian edition
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Joanne C. Jones
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