A company has entered into a cash-settled forward contract to sell 10m pounds at $1.5/pound. If the exchange rate at expiration is $1.75/pound, the company will: A. Make a payment of 2.5m dollars B. Receive a payment of 2.5 million pounds C. Make a payment of 10m pounds

Q: The following exchange rates are available to you. (You can buy or sell at the stated rates.)…

A: ¥120.00 = 1A$ SF1.6000 = 1A$ ¥80.00 =1SF Amount available = SF10, 000,000

Q: ording to the monetary approach to the exchange rate, a 10% increase in money supply in Canada would…

A: Assuming the constant demand, an increase in money supply in a country would result in depreciation…

Q: Use the following information for Problems 11 and 12.MNC Corp. (a U.S.-based company) sold parts to…

A:

Q: You have 1000000 CHF Assume the following exchange rates are quoted: Bank of America CHF/USD 1.56…

A: Yes. It is possible of triangular arbitrage for the given exchange rates.

Q: AL Maha, an Omani Company which close its accounts on 31/12 every year, sold goods to Korean Company…

A: When sale is made to customers and there is difference in foreign exchange rates on date of sale and…

Q: Brexylite plc is due to pay €1,750,000 to its European suppliers in 3 months’ time. The financial…

A: Total payment in £ = Amount payable in € * Buying rate of forward contract

Q: Spot Exchange Rate is GBP 1.83155 = 1 OMR (For Immediate Delivery). Instead of buying GBP…

A: In this case, the OMR is trading at a premium since the future rate is higher than the spot rate.

Q: You are leaving Mexico and have 290 pesos to change into dollars. The exchange rate is now 12 pesos…

A: in this you have to convert into dollars by exchange rate given.

Q: Iberico plc, a Spanish firm whose functional currency is EUR, sold goods to a British customer for…

A: Debtors, also known as accounts receivable, are those to whom the business sells goods and services…

Q: An Omani importer expects appreciation of Us Dollar while importing goods for US $2,000. The…

A: The answer states the computation of gain from forward cover

Q: Kline Inc. purchases goods for 5,000 pounds on October 31, Year 1. The company pays for the goods…

A: Foreign exchange rate is defined as the rate at which the currency of one country is exchanged with…

Q: any purchases 80,000 US dollars under a forward contract dated November 1, 2020, for delivery on…

A: Foward contracts are contract between the two parties for mutual exchange of the currencies in the…

Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.