7.ABC Company, a British company, expects to receive $10,000,000 in 30 days. It wants to hedge its foreign currency risk in the forward market. The forward price of the pound contract is 0.74 pounds/$. If the exchange rate at contract settlement were 0.75 pounds/$, ABC’s net overall inflow would be closest to: A. 7,400,000 pounds B. 7,500,000 pounds C. -100,000 pounds
7.ABC Company, a British company, expects to receive $10,000,000 in 30 days. It wants to hedge its foreign currency risk in the forward market. The forward price of the pound contract is 0.74 pounds/$. If the exchange rate at contract settlement were 0.75 pounds/$, ABC’s net overall inflow would be closest to: A. 7,400,000 pounds B. 7,500,000 pounds C. -100,000 pounds
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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7.ABC Company, a British company, expects to receive $10,000,000 in 30 days. It wants to hedge its foreign currency risk in the forward market. The forward price of the pound contract is 0.74 pounds/$. If the exchange rate at contract settlement were 0.75 pounds/$, ABC’s net overall inflow would be closest to:
A. 7,400,000 pounds
B. 7,500,000 pounds
C. -100,000 pounds
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