.noitudifaib Isimbnid eri to abitan91062169 Of Ixen ert to A vitose ni oni lliw ito ten other videoTask 1:tamA U.S.-based company imports furniture from Germany. In accordance with the contract, the U.S. companywill have to pay €8,000,000 for a shipment of furniture in 30 days. Information about the spot and forwardrates is given below:Current spot rateEUR/USD 0.800EUR/USD 0.79930-day forward rate1. Describe the risk that the U.S. company is exposed to.(1 USD costs 0.8 EUR)AlesTitmuminim en 169 Isait ati to 19hsup dhuot erit ni mit is not sure29mu6 1900sm erT .000,000, Are ai etsmitee mumixem erit bris 000,000,r3 ai eunevet 29lsa to stsmitee.betudinteib ylmotinu ens elsa erlt terit19hsup rihuot erlt not euneven 2elsa to eulsv betoqxe erit animated2. Explain how the U.S. company can hedge the risk by using the forward contract. q ert bri

An importer has to make foreign currency payment in the future and is prone to the risk of…

oni i fiton ten a notio erit ferit vtilis 019911 Task 1: A U.S.-based company imports furniture from Germany. In accordance with the contract, the U.S. company will have to pay €8,000,000 for a shipment of furniture in 30 days. Information about the spot and forward rates is given below: Current spot rate 30-day forward rate EUR/USD 0.800 EUR/USD 0.799 1. Describe the risk that the U.S. company is exposed to. (1 USD costs 0.8 EUR) A lesT im erT 189y Isoeit ati to 19hsup dhuot ert ni mit s 1ot suneven als pritej i pensen A 26 1906п6m erT .000,000,Are ai etsmites mumixsm erit bris 000,000,er9 ai eunevet 29lse to stsmitee .betudinteib ylmotinu ens elsa erit ferit 19hsup rihuot erit not euneve1 29lsa to eulsv betosqxe erit animated 2. Explain how the U.S. company can hedge the risk by using the forward contract.q erit bri

oni i fiton ten a notio erit ferit vtilis 019911 Task 1: A U.S.-based company imports furniture from Germany. In accordance with the contract, the U.S. company will have to pay €8,000,000 for a shipment of furniture in 30 days. Information about the spot and forward rates is given below: Current spot rate 30-day forward rate EUR/USD 0.800 EUR/USD 0.799 1. Describe the risk that the U.S. company is exposed to. (1 USD costs 0.8 EUR) A lesT im erT 189y Isoeit ati to 19hsup dhuot ert ni mit s 1ot suneven als pritej i pensen A 26 1906п6m erT .000,000,Are ai etsmites mumixsm erit bris 000,000,er9 ai eunevet 29lse to stsmitee .betudinteib ylmotinu ens elsa erit ferit 19hsup rihuot erit not euneve1 29lsa to eulsv betosqxe erit animated 2. Explain how the U.S. company can hedge the risk by using the forward contract.q erit bri

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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Arvin Australian Imports has agreed to purchase 15,000 cases of Australian wine for 6 million Australian dollars at today's spot rate. The firm's financial manager, Sarah Vintnor, has noted the following current spot and forward rates: U.S. Dollar/Australian Dollar Australian Dollar/U.S. Dollar Spot 0.7285 1.3727 30-day forward 0.7287 1.3723 90-day forward 0.7294 1.3710 180-day forward 0.7306 1.3687 On the same day, Vintnor agrees to purchase 15,000 more cases of wine in 3 months at the same price of 6 million Australian dollars. a. What is the price of the wine in U.S. dollars if it is purchased at today's spot rate? Round your answer to the nearest cent. $ ___ b. What is the cost in U.S. dollars of the second 15,000 cases if payment is made in 90 days and the spot rate at that time equals today's 90-day forward rate? Round your answer to the nearest cent. $ ___ c. If the exchange rate for the Australian dollar is 1.31 to $1 in 90 days, how much will Vintnor have to…
On June 1, 2017, Micro Corp. received an order for parts from a Mexican customer at a price of 1,000,000 Mexican pesos with a delivery date of July 31, 2017. On June 1, when the U.S. dollar–Mexican peso spot rate is $0.115, Micro Corp. entered into a two month forward contract to sell 1,000,000 pesos at a forward rate of $0.12 per peso. Micro designates the forward contract as a fair value hedge of the firm commitment to receive pesos, and the fair value of the firm commitment is measured by referring to changes in the peso forward rate. Micro delivers the parts and receives payment on July 31, 2017, when the peso spot rate is $0.118. On June 30, 2017, the Mexican peso spot rate is $0.123, and the forward contract has a fair value of $2,400.What is Micro’s net increase or decrease in cash flow from having entered into this forward contract hedge? Choose the correct.a. $–0–.b. $1,000 increase in cash flow.c. $1,500 decrease in cash flow.d. $2,000 increase in cash flow.
7
Looking for help with Requriement B
Brandlin company of anaheim, california, sells parts to a foreign customer on december 1, 2017, with payment of 24,000 korunas to be received on march 1, 2018. Brandlin enters into a forward contact on december 1, 2017 to sell 24,000 korunas on march 1, 2018. Relevant exchange rates for the korunas on various dates are as follow: date spot rate forward rate december 1, 2017 4.20 4.275 december 31, 2017 4.30 4.400 march 1, 2018 4.45 n/a brandli's incremental borrowing rate is 12 percent. The present value factor for two months at annual interest rate of 12 percent (1 percent per month) is 0.9803. Brandlin must close its books and prepare financial statements at december 31. 1. Assuming that brandlin designates the forward contract as a cash flow hedge of a foreign currency receivable and recognizes any premium or discount…
ABC is asked to quote a price in Jamaican dollars for computer sales to a Jamaican company. The computers will be paid for in four equal, quarterly installments, beginning 90 days from now. ABC requires a minimum price of $2.5 million to accept this contract. Suppose the spot and forward rates for the J$ are as follows: Spot 90-Day 180-Day 270-Day 360-Day $0.0307 $0.0302 $0.0298 $0.0293 $0.0287 What is the minimum J$ price that ABC should quote for this order? a. J$ 87,108,014 b. J$ 82,781,457 c. J$ 84,745,763 d. J$ 81,433,225
The following data applies to Anie Company’s purchase of 60,000 Belgium francs under a forward contract datedNovember 30, 2021, for delivery on March 1, 2022:11/30/2021 12/31/2021 03/01/2022Spot rates 55.75 53.90 54.5030-day forward rate 51.30 56.15 53.2060-day forward rate 57.65 52.30 55.7590-day forward rate 54.25 55.45 52.10Anie Company entered into the forward contract to speculate in the foreign currency. In its Income Statement for the yearended December 31, 2021, what amount of loss should the company report from this forward contract?
Boisjoly Watch Imports has agreed to purchase 15,000 Swiss watches for 1 million francs at today's spot rate. The firm's financial manager, James Desreumaux, has noted the following current spot and forward rates: U.S. Dollar / Franc Franc / U.S. Dollar Spot 1.6590 0.6028 30-day forward 1.6540 0.6046 90-day forward 1.6460 0.6075 180-day forward 1.6400 0.6098 On the same day, Desreumaux agrees to purchase 15,000 more watches in 3 months at the same price of 1 million francs. What is the cost of the watches, in U.S. dollars, if purchased at today's spot rate? Cost of Watches = Swiss Francs / Franc/U.S Dollar
Cost of Abalone Country Australia Chile Ireland New Zealand South Africa CLP ISK NZD Abalone Cost AUD 93,500 ZAR 640,000 50,990,000 5,400,000 104,000 Exchange Rate $1 U.S. 1.1 AUD 585 CLP 61 ISK 1.3 NZD 7.8 ZAR %3D Refer to the table above. An international seafood supplier is offered 9.46 million yen today for 1000 pounds of abalone frozen in the shell. One thousand pounds of abalone can be sourced from various countries at the prices shown above. The current market exchange rates between the United States and the other relevant currencies are also shown. In addition, $1 U.S. = 104 yen. What is the value, in U.S. dollars, of the best deal the international seafood supplier can make? $9962 O $12,462 O $10,962 O $11,962
Finance
Chinook, Inc. purchases components from a Japanese company that requires payment in yen (Y); it sells finished products to a German company that pays in euros. On June 1, Chinook ordered components from the Japanese Company costing Y6,890,000 and sold finished goods to the German company with a selling price of $150,000 to be paid in euros. The June 1 spot rates of U.S. dollars for yen and for euros was: $1 = Y106.0 $1 = E0.84 Required: 1. What is the cost of the Y6,890,000 in dollars? 2. How many euros will Chinook receive from the German company in payment for the finished product? 3. What if the exchange rate of dollars for yen was $1 = Y108? What is the cost of the Y6,890,000 in dollars (rounded to the nearest dollar)?
Williams Corporation imports, from a number of German manufacturers, large machining equipment used in the tooling industry. On June 1, the company received delivery of a piece of machinery with a cost of 450,000 euros when the spot rate was 1 euro equals $1.370. Williams had already paid 50,000 euros, when the spot rate was 1 euro equals $1.350, to the German company at the time of placing the order, and the balance of the invoice was due in 60 days after delivery. On June 15, the company became concerned that the dollar would weaken relative to the euro and proceeded to purchase an option to buy euros on July 31 at a strike price of 1 euro equals $1.375. The hedge was designated as a fair value hedge. At the time of purchase, the out-of-the-money option had a value of $1,400 and a value of $2,600 at June 30. Euro spot rates are as follows: 1 euro =June 15 . . . . . . . . . . . . . . . . . . . . . . . . . .…

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