Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter27: Multinational Financial Management
Section: Chapter Questions
Problem 7MC
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Question
6.ABC Company, a British company, expects to receive $10,000,000 in 30 days. It wants to hedge its foreign currency risk in the forward market. The forward price of the pound contract is 0.74 pounds/$. If the exchange rate at forward contract settlement is 0.71 pounds/$, ABC’s payoff on the forward contract is closest to:
A. -300,000 pounds
B. 300,000 pounds
C. Zero
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