ast products year, your compan eal 850,000 in 6 months. The following quotations are p sold to Braz. In $ per $ 2.3810 eal m. forward m. forward 0.4200 0.4210 2.3753 0.4350 2.2989 m. forward 0.4115 2.4301
ast products year, your compan eal 850,000 in 6 months. The following quotations are p sold to Braz. In $ per $ 2.3810 eal m. forward m. forward 0.4200 0.4210 2.3753 0.4350 2.2989 m. forward 0.4115 2.4301
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question

Transcribed Image Text:Last year, your company sold electronic products to Brazil. You are expecting to receive
Real 850,000 in 6 months. The following quotations are provided by a currency dealer:
In $
Real
1 m. forward
3 m. forward
per $
2.3810
2.3753
0.4200
0.4210
0.4350
2.2989
6 m. forward
0.4115
2.4301
If you are completely confident that the spot rate in 6 months will be 0.4228, do you need
to take a short or long position in Real forward contract?
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