Chap011_class

Chap011_class - Chapter 11 Foreign Currency Transactions...

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Unformatted text preview: Chapter 11 Foreign Currency Transactions Part I ¡ exchange rates and foreign currency risk l ti f i h t ti ¡ translating foreign exchange transactions art II Part II ¡ Hedging with forward contracts ¡ Today P11-24 (Part I) ext Class: P11- 4 (Part II) 1 ¡ Next Class: P11 24 (Part II) Direct vs. Indirect Exchange Rates irect exchange rate ¡ direct exchange rate ¢ how many US dollars can I buy with 1 FCU? U.S. dollar equivalent value 1 FCU ¡ indirect exchange rate ¢ reciprocal of the the direct exchange rate ¢ how many FCU’s will I receive if I sell $1 US? 2 Direct and Indirect Exchange Rates as of March 31, 1998 Buy US Sell US Sell FC Buy FC (Direct) (Indirect)---------------------- Australian Dollar 0.6614 1.512 British Pound 1.6750 0.597 anadian Dollar 7060 416 Canadian Dollar 0.7060 1.416 Danish Mark 0.5406 1.850 French Franc 0.1613 6.198 Japanese Yen 0.0075 133.333 1FCU = ?$ $1 = ?FCU 3 Source: http://finance.yahoo.com/currency Using Direct and Indirect Exchange Rates e.g. account receivable of 1,500 Australian ollars dollars ¡ using direct exchange rate ¡ using indirect exchange rate 4 Using Direct and Indirect...
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This note was uploaded on 05/01/2010 for the course MGMT 503 taught by Professor Staff during the Spring '08 term at Purdue.

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Chap011_class - Chapter 11 Foreign Currency Transactions...

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