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Your firm is a U.K. -based exporter of British bicycles. You have sold an order to an American firm for $ 1,000,000 worth of bicycles. Payment from the American firm (in U.S. dollars) is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Multiple Choice Go short 12 six -month futures contracts; pay £555, 600. Go long 9 six -month futures contracts; raise approximately £537,600. Go short 9 six-month futures contracts. Pay approximately £537,600. Check my Your firm is a UK-based exporter of British bicycles. You have sold an order to an American firm for $1,000,000 worth of bicycles. Payment from the American firm (in U.S. dollars) is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk. U.S.$ equivalent Country Tuesday Monday Currency per U.S.$ Tuesday Monday Britain (spot) £62,500 1.8000 1.8100 0.5556 0.5525 1 Month Forward 1.8100 1.8300 0.5525 0.5464 3 Months Forward 1.8300 1.8600 0.5464 0.5376 6 Months Forward 1.8600 1.8200 0.5376 0.5495 12 Months Forward 1.8200 1.8000 0.5495 0.5556 Multiple Choice Go short 12 six-month futures contracts; pay £555,600. Go long 9 six-month futures contracts; raise approximately £537,600. Go short 9 six-month futures contracts. Pay approximately £537,600.

Your firm is a U.K. -based exporter of British bicycles. You have sold an order to an American firm for $ 1,000,000 worth of bicycles. Payment from the American firm (in U.S. dollars) is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Multiple Choice Go short 12 six -month futures contracts; pay £555, 600. Go long 9 six -month futures contracts; raise approximately £537,600. Go short 9 six-month futures contracts. Pay approximately £537,600. Check my Your firm is a UK-based exporter of British bicycles. You have sold an order to an American firm for $1,000,000 worth of bicycles. Payment from the American firm (in U.S. dollars) is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk. U.S.$ equivalent Country Tuesday Monday Currency per U.S.$ Tuesday Monday Britain (spot) £62,500 1.8000 1.8100 0.5556 0.5525 1 Month Forward 1.8100 1.8300 0.5525 0.5464 3 Months Forward 1.8300 1.8600 0.5464 0.5376 6 Months Forward 1.8600 1.8200 0.5376 0.5495 12 Months Forward 1.8200 1.8000 0.5495 0.5556 Multiple Choice Go short 12 six-month futures contracts; pay £555,600. Go long 9 six-month futures contracts; raise approximately £537,600. Go short 9 six-month futures contracts. Pay approximately £537,600.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter22: International Financial Management
Section: Chapter Questions
Problem 3P
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Your firm is a U.K. -based exporter of British bicycles. You have sold an order to an American firm for $ 1,000,000 worth of bicycles. Payment from the American firm (in U.S. dollars) is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Multiple Choice Go short 12 six -month futures contracts; pay £555, 600. Go long 9 six -month futures contracts; raise approximately £537,600. Go short 9 six-month futures contracts. Pay approximately £537,600. Check my Your firm is a UK-based exporter of British bicycles. You have sold an order to an American firm for $1,000,000 worth of bicycles. Payment from the American firm (in U.S. dollars) is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk. U.S.$ equivalent Country Tuesday Monday Currency per U.S.$ Tuesday Monday Britain (spot) £62,500 1.8000 1.8100 0.5556 0.5525 1 Month Forward 1.8100 1.8300 0.5525 0.5464 3 Months Forward 1.8300 1.8600 0.5464 0.5376 6 Months Forward 1.8600 1.8200 0.5376 0.5495 12 Months Forward 1.8200 1.8000 0.5495 0.5556 Multiple Choice Go short 12 six-month futures contracts; pay £555,600. Go long 9 six-month futures contracts; raise approximately £537,600. Go short 9 six-month futures contracts. Pay approximately £537,600.
Transcribed Image Text:Your firm is a U.K. -based exporter of British bicycles. You have sold an order to an American firm for $ 1,000,000 worth of bicycles. Payment from the American firm (in U.S. dollars) is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Multiple Choice Go short 12 six -month futures contracts; pay £555, 600. Go long 9 six -month futures contracts; raise approximately £537,600. Go short 9 six-month futures contracts. Pay approximately £537,600. Check my Your firm is a UK-based exporter of British bicycles. You have sold an order to an American firm for $1,000,000 worth of bicycles. Payment from the American firm (in U.S. dollars) is due in six months. Detail a strategy using futures contracts that will hedge your exchange rate risk. U.S.$ equivalent Country Tuesday Monday Currency per U.S.$ Tuesday Monday Britain (spot) £62,500 1.8000 1.8100 0.5556 0.5525 1 Month Forward 1.8100 1.8300 0.5525 0.5464 3 Months Forward 1.8300 1.8600 0.5464 0.5376 6 Months Forward 1.8600 1.8200 0.5376 0.5495 12 Months Forward 1.8200 1.8000 0.5495 0.5556 Multiple Choice Go short 12 six-month futures contracts; pay £555,600. Go long 9 six-month futures contracts; raise approximately £537,600. Go short 9 six-month futures contracts. Pay approximately £537,600.
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