Your firm is a U.K. -based exporter of British bicycles. You have sold an order to an American firm for $ 1,000,000 worth of bicycles. Payment from the American firm (in U.S. dollars) is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Multiple Choice Go short 12 six -month futures contracts; pay £555, 600. Go long 9 six -month futures contracts; raise approximately £537,600. Go short 9 six-month futures contracts. Pay approximately £537,600. Check my Your firm is a UK-based exporter of British bicycles. You have sold an order to an American firm for $1,000,000 worth of bicycles. Payment from the American firm (in U.S. dollars) is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk. U.S.$ equivalent Country Tuesday Monday Currency per U.S.$ Tuesday Monday Britain (spot) £62,500 1.8000 1.8100 0.5556 0.5525 1 Month Forward 1.8100 1.8300 0.5525 0.5464 3 Months Forward 1.8300 1.8600 0.5464 0.5376 6 Months Forward 1.8600 1.8200 0.5376 0.5495 12 Months Forward 1.8200 1.8000 0.5495 0.5556 Multiple Choice Go short 12 six-month futures contracts; pay £555,600. Go long 9 six-month futures contracts; raise approximately £537,600. Go short 9 six-month futures contracts. Pay approximately £537,600.
Your firm is a U.K. -based exporter of British bicycles. You have sold an order to an American firm for $ 1,000,000 worth of bicycles. Payment from the American firm (in U.S. dollars) is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Multiple Choice Go short 12 six -month futures contracts; pay £555, 600. Go long 9 six -month futures contracts; raise approximately £537,600. Go short 9 six-month futures contracts. Pay approximately £537,600. Check my Your firm is a UK-based exporter of British bicycles. You have sold an order to an American firm for $1,000,000 worth of bicycles. Payment from the American firm (in U.S. dollars) is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk. U.S.$ equivalent Country Tuesday Monday Currency per U.S.$ Tuesday Monday Britain (spot) £62,500 1.8000 1.8100 0.5556 0.5525 1 Month Forward 1.8100 1.8300 0.5525 0.5464 3 Months Forward 1.8300 1.8600 0.5464 0.5376 6 Months Forward 1.8600 1.8200 0.5376 0.5495 12 Months Forward 1.8200 1.8000 0.5495 0.5556 Multiple Choice Go short 12 six-month futures contracts; pay £555,600. Go long 9 six-month futures contracts; raise approximately £537,600. Go short 9 six-month futures contracts. Pay approximately £537,600.
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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Transcribed Image Text:Your firm is a U.K. -based exporter of British bicycles.
You have sold an order to an American firm for $
1,000,000 worth of bicycles. Payment from the
American firm (in U.S. dollars) is due in six months.
Detail a strategy using futures contracts that will hedge
your exchange rate risk. Multiple Choice Go short 12 six
-month futures contracts; pay £555, 600. Go long 9 six
-month futures contracts; raise approximately
£537,600. Go short 9 six-month futures contracts. Pay
approximately £537,600.
Check my
Your firm is a UK-based exporter of British bicycles. You have sold an order to an American firm for $1,000,000 worth of bicycles. Payment from the
American firm (in U.S. dollars) is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk.
U.S.$ equivalent
Country
Tuesday
Monday
Currency per U.S.$
Tuesday
Monday
Britain (spot) £62,500
1.8000
1.8100
0.5556
0.5525
1 Month Forward
1.8100
1.8300
0.5525
0.5464
3 Months Forward
1.8300
1.8600
0.5464
0.5376
6 Months Forward
1.8600
1.8200
0.5376
0.5495
12 Months Forward
1.8200
1.8000
0.5495
0.5556
Multiple Choice
Go short 12 six-month futures contracts; pay £555,600.
Go long 9 six-month futures contracts; raise approximately £537,600.
Go short 9 six-month futures contracts. Pay approximately £537,600.
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