Green has just sold equipment to Brown. Green is a US company who has USD accounting. Sale date is June 2020 and payment date December 2020. 

Deal amount €1 000 000Bonjour 

Spot June = $1.15/€

6-month forward contract = $1.14€

Spot December forecast = $1.16/€

Eurozone 6-month borrowing rate = 1.0%/year

Determine foreign exchange gains/(losses) if Green hedges with 

1. 100% with forwards 

2. 50% with forwards 

3. does not hedge 

4. money market hedge, how much should they borrow and in which currency? 

e. money market hedge, how much are the USD proceeds? 

 

Answer rating: 100% (QA)

a The company has USD accounting and sale was in March 2020 The amount was ... View the full answer