Your firm is a uk based exporter of bicycles you have

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24. Your firm is a U.K.-based exporter of bicycles. You have sold an order to a French firm for €1,000,000 worth of bicycles. Payment from the French firm (in euro) 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 euro futures contracts; and short 80 12-month pound futures contracts.B. Go long 100 12-month euro futures contracts; and long 80 12-month pound futures contracts.C. Go long 100 12-month euro futures contracts; and short 80 12-month pound futures contracts.D.Go short 100 12-month euro futures contracts; and long 80 12-month pound futures contracts.E. None of the aboveSell €1m (a short position) forward using futures contracts, at the 12-month forward rate of $1.60 per €1 receive $1,600,000 = €1,000,000 $1.60/€1. At the 12-month forward rate of $2/this is worth 800,000. Go long pound futures contracts.
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Chapter 08 - Management of Transaction Exposure25. Your firm is a U.K.-based 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 many contracts of what type and maturity.
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Chapter 08 - Management of Transaction Exposure26. Your firm is a Swiss exporter of bicycles. You have sold an order to a French firm for €1,000,000 worth of bicycles. Payment from the French firm (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 many contracts of what type and maturity.

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