American Airlines hedges a £2.5 million receivable by selling pounds forward. If the spot rate is $1.742/£ and the 90-day forward rate is $1.7158/£, what is American's actual true cost of hedging if the spot rate at the end of 90-days is $1.73/£?

Answer rating: 100% (QA)

Heres how to calculate the true cost of hedging for American Airlines 1 Calculate the value of the ... View the full answer