Self- e quiz!] Suppose that Retrojo Inc. is a U.S. based MNC that will need to...

 

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Self- e quiz!] Suppose that Retrojo Inc. is a U.S. based MNC that will need to purchase F$1.70 million (Fijian dollars, F$) worth of imports from Fiji in 90 days. Currently, the spot rate for the Fijian dollar is $0.48 per F$. Suppose that Retrojo negotiates a forward contract with a bank, which commits it to purchasing Fijian dollars at F$1,700,000.00 at $0.48 per Fijian dollar in 90 days. Thus, Retrojo knows with certainty that it will need FS1,700,000.00 x 50.48 per Fijian dollars - $816,000.00 for this exchange. (U.S. dollars) would be needed to If the Fijian dollar depreciates over this time period, to $0.38 per Fijian dollar, then only exchange for the required F$1,700,000.00. Grade Final Step Self- e quiz!] Suppose that Retrojo Inc. is a U.S. based MNC that will need to purchase F$1.70 million (Fijian dollars, F$) worth of imports from Fiji in 90 days. Currently, the spot rate for the Fijian dollar is $0.48 per F$. Suppose that Retrojo negotiates a forward contract with a bank, which commits it to purchasing Fijian dollars at F$1,700,000.00 at $0.48 per Fijian dollar in 90 days. Thus, Retrojo knows with certainty that it will need FS1,700,000.00 x 50.48 per Fijian dollars - $816,000.00 for this exchange. (U.S. dollars) would be needed to If the Fijian dollar depreciates over this time period, to $0.38 per Fijian dollar, then only exchange for the required F$1,700,000.00. Grade Final Step

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In this case assuming Retrojo has entered into forward contract and thus even i... View the full answer