Question: 10-) Ege Endstri ve Ticaret A.S. (EGEEN) is a Turkey-based company that sold axle and axle parts to Volkswagen Germany on credit and invoiced

10-) Ege Endüstri ve Ticaret A.S. (EGEEN) is a Turkey-based company that sold axle and axle parts to Volkswagen Germany on cr

10-) Ege Endstri ve Ticaret A.S. (EGEEN) is a Turkey-based company that sold axle and axle parts to Volkswagen Germany on credit and invoiced 10 million payable in six months (payable for Volkswagen Germany). Currently, the six-month forward exchange rate is TL23.50/ and the foreign exchange advisor for EGEEN predicts that the spot rate is likely to be TL22.50/ in six months. a) What is the expected gain/loss from the forward hedging? b) If you were the financial manager of EGEEN, would you recommend hedging this euro receivable? Why or why not? c) Suppose the foreign exchange advisor predicts that the future spot rate will be the same as the forward exchange rate quoted today. Would you recommend hedging in this case? Why or why not? d) Suppose now that the future spot exchange rate is forecast to be TL24.50/. Would you recommend hedging? Why or why not?

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