AussieGold Ltd., an Australian gold mining company, sells gold to U.S. clients in USD. The company has not hedged its gold price or foreign exchange risk. The current spot exchange rate is AUD$ 1.00 = USD$ 0.677 and the current gold spot price is USD$ 1522 per ounce. Which of the following scenarios represents the best possible outcome for AussieGold Ltd. over the next year? There is no change in the AUD/USD exchange rate and no change in the gold spot price. AUD strengthens relative to the USD, and the gold spot price falls. AUD weakens relative to the USD, and the gold spot price falls. AUD strengthens relative to the USD, and the gold spot price rises. AUD weakens relative to the USD, and the gold spot price rises.
AussieGold Ltd., an Australian gold mining company, sells gold to U.S. clients in USD. The company has not hedged its gold price or foreign exchange risk.
The current spot exchange rate is AUD$ 1.00 = USD$ 0.677 and the current gold spot price is USD$ 1522 per ounce.
Which of the following scenarios represents the best possible outcome for AussieGold Ltd. over the next year?
There is no change in the AUD/USD exchange rate and no change in the gold spot price. |
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AUD strengthens relative to the USD, and the gold spot price falls. |
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AUD weakens relative to the USD, and the gold spot price falls. |
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AUD strengthens relative to the USD, and the gold spot price rises. |
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AUD weakens relative to the USD, and the gold spot price rises. |
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