Germany on credit and invoiced 12.8million payable in six months. Currently, the six-month forward exchange rate is
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Germany on credit and invoiced €12.8million payable in six months. Currently, the six-month forward exchange rate is $1.24 = 1€. a. Is Cray worried about the euro appreciating or depreciating? Explain b. What will be the future value in euro if Cray hedges 100% with a forward hedge? c. If in six months, the spot rate turns out to be $1.19 = 1€, would Cray be happy that it had used the forward hedge? d. How much better (or worse) off would Cray have been without the hedge?
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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