2. A rice exporting company has exported goods worth $ 3,90,000 due to be received in 9...
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2. A rice exporting company has exported goods worth $ 3,90,000 due to be received in 9 months. Fulling realizing the exchange rate risk, the rice exporter uses the forward market to hedge the receipt.
Spot Exchange Rate | Rs. 64.56/$ |
Interest Rate in USA | 1.25 % |
Interest Rate in India | 8% |
The forward rates truly reflect the interest rates differential. Find out the gain/loss to USA exporter if Indian Rupee spot rates decline 1.5%. (20 Marks)
Related Book For
Accounting
ISBN: 978-0324662962
23rd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
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