Victoria Exports (Canada). A Canadian exporter, Victoria Exports, will be receiving six payments of €13,800, ranging from now to 12 months in the future. Since the company keeps cash balances in both Canadian dollarsand U.S. dollars, it can choose which currency to exchange the euros for at the end of the various periods. Which currency appears to offer the better rates in the forward market? (Click on the icon to import the table intoa spreadsheet.)PeriodDays Forwardspot1 monthC$/euro1.33471.3370US$/euro1.32191.3224m2 months3 months1.339230601.3229901.32351801.343812 months3601.34641.32391.32696 months1.3416Calculate the forward premium, the Canadian dollar proceeds, and the difference from the spot rate proceeds in the C$/Euro forward market below: (Round the forward premium to three decimal places and the Canadiandollar amounts to the nearest cent.)DaysForward PremiumC$ Proceeds ofDifferencePeriodForwardC$/euroon the C$/euro€13,800Over Spot01.3347C$C$Spot

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Answered: Victoria Exports (Canada). A Canadian…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter10: Measuring Exposure To Exchange Rate Fluctuations

Section: Chapter Questions

Problem 3ST

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2. Victoria Exports. A Canadian exporter, Victoria Exports, will be receiving six payments of €12,000, ranging from now to 12 months in the future. Since the company keeps cash balances in both Canadian dollars and U.S. dollars, it can choose which currency to exchange the euros for at the end of the various
Let’s suppose you (USA dealer) imported a product from German on Dec 1, 2018 at € 300, payable in 60 days. You sold all of them in the US market at $400 in cash on Dec 15, 2018. The company's fiscal year ends on Dec 31. You paid to your German supplier on Feb 1, 2019. Below, please find the exchange rate information: Dec 1, 2018: 1.2 $/€. Dec 31, 2018: 1.5 $/€ Feb 1, 2019: 1.0 $/€ What was net income for 2018 and 2019, respectively? Group of answer choices A) -$50, $150 B) $250, -100 C)$200, $100 D)$250, $100
Your firm is a U.S.-based supplier of agricultural parts. A European customer just made a €50,000 purchase on trade credit terms of net 30 days. At the time of the sale, the exchange rate was EUR/USD 1.19. The projected exchange rate in 30 days is EUR/USD 1.21. Calculate the value of accounts receivable on the date of the sale. a. $41,322.31 b. $42,016.81 C. $59,500.00 d. $60,500.00
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3. A firm exports goods from Botswana to South Africa costing ZAR450 000.00. Payment is expected in 3 months' time. Exchange rates are as follows: ■ Current spot rate: BWP1.00 = ZAR1.30 Forward rate in three months: BWP1.00=ZAR1.30 Spot rate in three months: BWP1.00 = ZAR1.40 Required: a. Examine whether hedging is beneficial to the firm b. Outline any three challenges of using forward contracts (7 marks) (3 marks)
The following exchange rates are available to you. (You can buy or sell at the stated rates.) Mt Fuji Bank ¥120.00/A$ Mt Rushmore Bank SF1.6000/A$ Mt Blanc Bank ¥80.00/SF Assume that you have SF10, 000,000. Can you make a profit via triangular arbitrage? If so, show the steps that you will follow and calculate the amount of profit in Swiss francs.
Suppose your company imports computer motherboards from Singapore. The exchange rate is $1.4878 per Singapore dollar. You have just placed an order for 41107 motherboards at a cost to you of S147 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $118 each. What is the break-even exchange rate? NOTE: Enter the PERCENTAGE number rounding to two decimals.
Suppose that Retrojo Inc. is a U.S. based MNC that will need to purchase F$1.10 million (Fijian dollars, F$) worth of imports from Fiji in 90 days. Currently, the spot rate for the Fijian dollar is $0.53 per F$. Suppose that Retrojo negotiates a forward contract with a bank, which commits it to purchasing Fijian dollars at F$1,100,000.00 at $0.53 per Fijian dollar in 90 days. Thus, Retrojo knows with certainty that it will need F$1,100,000.00 × $0.53 per Fijian dollars = $583,000.00 for this exchange. Assume the Fijian dollar depreciates over this time period to $0.42 per Fijian dollar. If this were the case the, outside of the contract with the bank, only $ (U.S. dollars) would be needed to exchange for the required F$1,100,000.00.
Ganado Corporation recently received a payment for one of the consignments it exported to Europe, It has 2,000 Euros (€ or EUR) with it. Wanting to exchange all of these for Russian rubles(R or RUB) since it will be importing a new machine from a merchant in Russia, it obtains the following quotes: Spot rate USD=1.00 EUR (or $/€) Spot rate RUB=1.00 USD (or R/S) a. What is the Russian ruble to euro crossrate? b. How many Russian rubles will you obtain for your Euros? 1.1280 62.40
Suppose that Retrojo Inc. is a U.S. based MNC that will need to purchase F$2.00 million (Fijian dollars, F$) worth of imports from Fiji in 90 days. Currently, the spot rate for the Fijian dollar is $0.80 per F$. Suppose that Retrojo negotiates a forward contract with a bank, which commits it to purchasing Fijian dollars at F $2,000,000.00 at $0.80 per Fijian dollar in 90 days. Thus, Retrojo knows with certainty that it will need F$2,000,000.00×$0.80 per Fijian dollars =$1,600,000.00 for this exchange. Assume the Fijian dollar depreciates over this time period to $0.67 per Fijian dollar. If this were the case the outside of the contract only (U.S. dollars) would be needed to exchange for the required F$2,000,000.00.
On your post graduation celebratory trip you decide to travel to Munich, Germany, to Moscow, Russia. You leave Munich with 15,000 euros in your wallet. Wanting to exchange all of them for Russian rubles, you obtain the following quotes: Spot rate on the dollar/euro cross rate: $1.3214/E Spot rate on the ruble/dollar cross rate: Rbl30.96/$ What is the Russian ruble/euro cross rate? How many rubles will you obtain for your euros?

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