Question: You've signed a contract to provide computer generated animations to a French movie company. The company has agreed to your price of $80,000, but is

You've signed a contract to provide computer generated animations to a French movie company. The company has agreed to your price of $80,000, but is not willing to bear the exchange rate risk. Instead, they will pay you 64,000 euros 6 months from now.

The spot exchange rate is 1.25 dollars per euro and the 6-month forward exchange rate is 1.29 dollars per euro.

Attempt 1/10 for 10 pts.

Part 1

If the spot exchange rate will be 1.34 dollars per euro in 6 months, how many dollars will you receive?

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Attempt 1/10 for 10 pts.

Part 2

If you buy a forward contract now, how many dollars will you receive in 6 months?

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