A Mexican company has an account receivable maturing in 24 months in dollars equivalent to $800,000. Due
Question:
A Mexican company has an account receivable maturing in 24 months in dollars equivalent to $800,000. Due to the exchange fluctuation of the Mexican peso with respect to the dollar, the financial administrator has thought of covering himself on the exchange rate, so he asks for your advice and that you answer the following:
If the contract size of options and futures on the US dollar are traded in blocks of $10,000 dollars, the strike price is $20.10 MXP/USD and the premium is $0.07 pesos per dollar.
What type of coverage of accounts receivable would you recommend taking the company's finance director and why?
-Generate a conclusion about the most convenient type of coverage (at least two strategies) for your client
Intermediate Accounting
ISBN: 978-0071339476
Volume 1, 6th Edition
Authors: Beechy Thomas, Conrod Joan, Farrell Elizabeth, McLeod Dick I