Multiple Choice
You have decided to hedge your exchange-rate risk in your U.S.-based firm by contracting forward to buy 500,000 Swiss Francs for delivery in one year.The current exchange rate is Sf1.6/$.The forward rate is Sf1.7/$(U.S.) .How much better (worse) off are you if you don't buy the forward contract and instead pay the spot rate in one year if it turns out to be Sf1.65/$?
A) ($14,245)
B) ($8,912)
C) $8,912
D) $27,472 current Dollar commitment =
Correct Answer:
Verified
Correct Answer:
Verified
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