Multiple Choice
Hudson Valley Distributors wants to be sure it has 10,000 cases of Beaujolais Nouveau to sell next November.In January,they enters into an agreement to buy the wine at a price of 30 euros to the case.Payment will be due at the end of November.They expect to sell the wine to restaurants and retailers for $63 per case.Hudson Valley has hedged its foreign exchange risk by entering into a forward contract to purchase euros in November at $1.30/euro.If the spot exchange rate at the end of November is $1.50/euro,the payoff to Hudson Valley for hedging is ________.
A) $180,000
B) ($60,000)
C) $60,000
D) $240,000
Correct Answer:
Verified
Correct Answer:
Verified
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