Question: Please answer the two questions: 1. Your small multinational US business has a 55,000 Euro consulting fees to pay a consultant based in Portugal in

Please answer the two questions:

1. Your small multinational US business has a 55,000 Euro consulting fees to pay a consultant based in Portugal in 6 months. The 6 month EUR forward rate is 1.25. You hedge 100% of the exposure using a forward contract. If the actual exchange rate in 6 months is 1.14, then what is the US dollar gain or loss on your hedged exposure?

2. Your small multinational US business has a 52,000 Euro travel expenses to pay for some costs for a conference in the Netherlands in 6 months. The 6 month EUR forward rate is 1.29. You hedge 100% of the exposure using a forward contract. If the actual exchange rate in 6 months is 1.03, then what is the US dollar gain or loss on your hedge of your plan?

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