Stover Corporation, a U.S. based exporter, makes sales of computer chips to a firm in Switzerland for
Fantastic news! We've Found the answer you've been seeking!
Question:
Stover Corporation, a U.S. based exporter, makes sales of computer chips to a firm in Switzerland for 56,600 Swiss francs revenues, or $40,000, at the spot rate of 1.415 francs per dollar. The terms of the sales are net 90 days, and the U.S. firm wants to cover this trade receivables with a forward market hedge to eliminate its exchange rate risk. Suppose the firm completes a forward hedge at the 90-day forward rate of 1.212 francs. If the spot rate in 90 days later is actually 1.019 francs, how much will the U.S. firm have saved or lost in U.S. dollars by hedging its exchange rate exposure?
Related Book For
Posted Date: