Database System Concepts
Database System Concepts
7th Edition
ISBN: 9780078022159
Author: Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan
Publisher: McGraw-Hill Education
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Caribou River. Caribou River, Ltd., a Canadian manufacturer of raincoats, does not selectively hedge its transaction exposure. Instead, if the date of the transaction is known with certainty, all foreign currency-denominated cash flows must utilize
the following mandatory forward cover formula:
Caribou expects to receive multiple payments in Danish kroner over the next year. Kr3,000,000 is due in 90 days; Kr2,300,000 is due in 180 days; and Kr950,000 is due in one year. Using the following spot and forward exchange rates,
would be the amount of forward cover required by company policy for each period?
what
What would be the Canadian dollar amount of forward cover required by company policy in 3 months?
C$ (Round to the nearest cent.)
Data table
Data table
(Click on the following icon in order to copy its contents into a spreadsheet.)
(Click on the following icon in order to copy its contents into a spreadsheet.)
Spot rate, Kr/C$
4.61
Mandatory Forward Cover
Paying the points forward
Receiving the points forward
0-90 days
90%
100%
91-180 days
70%
180 days
45%
3-month forward rate, Kr/C$
4.62
90%
50%
6-month forward rate, Kr/C$
12-month forward rate, Kr/CS
4.65
4.67
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Transcribed Image Text:Caribou River. Caribou River, Ltd., a Canadian manufacturer of raincoats, does not selectively hedge its transaction exposure. Instead, if the date of the transaction is known with certainty, all foreign currency-denominated cash flows must utilize the following mandatory forward cover formula: Caribou expects to receive multiple payments in Danish kroner over the next year. Kr3,000,000 is due in 90 days; Kr2,300,000 is due in 180 days; and Kr950,000 is due in one year. Using the following spot and forward exchange rates, would be the amount of forward cover required by company policy for each period? what What would be the Canadian dollar amount of forward cover required by company policy in 3 months? C$ (Round to the nearest cent.) Data table Data table (Click on the following icon in order to copy its contents into a spreadsheet.) (Click on the following icon in order to copy its contents into a spreadsheet.) Spot rate, Kr/C$ 4.61 Mandatory Forward Cover Paying the points forward Receiving the points forward 0-90 days 90% 100% 91-180 days 70% 180 days 45% 3-month forward rate, Kr/C$ 4.62 90% 50% 6-month forward rate, Kr/C$ 12-month forward rate, Kr/CS 4.65 4.67 Print Done Print Done
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