Your firm is a Swiss importer of bicycles You have placed an order with an

Your firm is a swiss importer of bicycles you have

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27. Your firm is a Swiss importer of bicycles. You have placed an order with an Italian firm for €1,000,000 worth of bicycles. Payment (in euro) is due in 12 months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Have an estimate of how manycontracts of what type and maturity.A. Go short 100 12-month euro futures contracts; and short 160 12-month SFr. futures contracts.B. Go long 100 12-month € futures contracts; and long 160 12-month SFr futures contracts.C.Go long 100 12-month euro futures contracts; and short 160 12-month Swiss Franc futures contracts.D. Go short 100 12-month euro futures contracts; and long 160 12-month Swiss Franc futures contracts.E. None of the aboveTopic: Forward Market Hedge8-63
Chapter 08 - Management of Transaction Exposure28. Your firm is an Italian exporter of bicycles. You have sold an order to a British firm for £1,000,000 worth of bicycles. Payment from the customer (in pounds sterling) is due in 12 months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Havean estimate of how many contracts of what type and maturity.A. Go long 100 12-month pound futures contracts; and long 125 12-month euro futures contracts.B. Go short 100 12-month pound futures contracts; and short 125 12-month euro futures contracts.C. Go long 100 12-month pound futures contracts; and short 125 12-month euro futures contracts.D.Go short 100 12-month pound futures contracts; and long 125 12-month euro futures contracts.E. None of the aboveTopic: Forward Market Hedge8-64
Chapter 08 - Management of Transaction Exposure29. Your firm is an Italian importer of bicycles. You have placed an order with a British firm for £1,000,000 worth of bicycles. Payment (in pounds sterling) is due in 12 months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Have an estimate of how many contracts of what type and maturity.A. Go long 100 12-month pound futures contracts; and long 125 12-month euro futures contracts.B. Go short 100 12-month pound futures contracts; and short 125 12-month euro futures contracts.C.Go long 100 12-month pound futures contracts; and short 125 12-month euro futures contracts.D. Go short 100 12-month pound futures contracts; and long 125 12-month euro futures contracts.E. None of the aboveTopic: Forward Market Hedge8-65
Chapter 08 - Management of Transaction Exposure30. Your firm is a U.K.-based exporter of bicycles. You have sold an order to a Swiss firm for SFr. 1,000,000 worth of bicycles. Payment from the Swiss firm (in Swiss francs) is due in 12 months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Havean estimate of how many contracts of what type and maturity.A.Go short 100 12-month Swiss franc futures contracts; and long 50 12-month pound futures contracts.B. Go long 100 12-month Swiss franc futures contracts; and short 50 12-month pound futures contracts.C. Go short 100 12-month Swiss franc futures contracts; and short 50 12-month pound futurescontracts.D. Go long 100 12-month Swiss franc futures contracts; and long 50 12-month pound futures contracts.E. None of the aboveTopic: Forward Market Hedge8-66

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