Hudson Valley Distributors wants to be sure it has 10,000 cases of Beaujolais Nouveau to sell next November. In January, they enter into an agreement to buy the wine at a price of 34.62 euro to the case. Payment will be due at the end of November. They expect to sell the wine to restaura vnts and retailers for $63 per case. Hudson Valley has hedged its foreign exchange risk by entering into a forward contract to purchase euros in November at $1.30/euro. Calculate the payoff to Hudson Valley for hedging if the spot exchange rate at the end of November is $1.25/euro.

Answer rating: 100% (QA)

Answer 1 Number of cases to be purchased next year to sell it will purchase these in euros 10000 ... View the full answer