Topic forward market hedge 28 your firm is an italian

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Topic:Forward Market Hedge
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Chapter 27 / Exercise 27-11
Intermediate Financial Management
Brigham/Daves
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28) 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 12months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Have anestimate of how many contracts of what type and maturity.U.S. $ equiv.Currency per U.S. $Contract SizeCountryTuesdayMondayTuesdayMonday£10,000Britain(pound)$1.9600$1.9400£ 0.5102£ 0.51551 monthforward$1.9700$1.9500£ 0.5076£ 0.51283 monthsforward$1.9800$1.9600£ 0.5051£ 0.51026 monthsforward$1.9900$1.9700£ 0.5025£ 0.507612monthsforward$2.0000$1.9800£ 0.5000£ 0.505110,000Euro$1.5600$1.5400€ 0.6410€ 0.64941 monthforward$1.5700$1.5500€ 0.6369€ 0.64523 monthsforward$1.5800$1.5600€ 0.6329€ 0.64106 monthsforward$1.5900$1.5700€ 0.6289€ 0.636912monthsforward$1.6000$1.5800€ 0.6250€ 0.6329SFr.10,000Swissfranc$0.9200$0.9000SFr. 1.0870SFr. 1.11111 monthforward$0.9400$0.9200SFr. 1.0638SFr. 1.08703 monthsforward$0.9600$0.9400SFr. 1.0417SFr. 1.06386 monthsforward$0.9800$0.9600SFr. 1.0204SFr. 1.041712monthsforward$1.0000$0.9800SFr. 1.0000SFr. 1.0204
DTopic:Forward Market Hedge
29) 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 strategyusing futures contracts that will hedge your exchange rate risk. Have an estimate of how manycontracts of what type and maturity.U.S. $ equiv.Currency per U.S. $Contract SizeCountryTuesdayMondayTuesdayMonday£10,000Britain(pound)$1.9600$1.9400£ 0.5102£ 0.51551 monthforward$1.9700$1.9500£ 0.5076£ 0.51283 monthsforward$1.9800$1.9600£ 0.5051£ 0.51026 monthsforward$1.9900$1.9700£ 0.5025£ 0.507612monthsforward$2.0000$1.9800£ 0.5000£ 0.505110,000Euro$1.5600$1.5400€ 0.6410€ 0.64941 monthforward$1.5700$1.5500€ 0.6369€ 0.64523 monthsforward$1.5800$1.5600€ 0.6329€ 0.64106 monthsforward$1.5900$1.5700€ 0.6289€ 0.636912monthsforward$1.6000$1.5800€ 0.6250€ 0.6329SFr.10,000Swissfranc$0.9200$0.9000SFr. 1.0870SFr. 1.11111 monthforward$0.9400$0.9200SFr. 1.0638SFr. 1.08703 monthsforward$0.9600$0.9400SFr. 1.0417SFr. 1.06386 monthsforward$0.9800$0.9600SFr. 1.0204SFr. 1.041712monthsforward$1.0000$0.9800SFr. 1.0000SFr. 1.0204
CTopic:Forward Market Hedge

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Term
Spring
Professor
Viale
Tags
International Finance, Forward contract
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Intermediate Financial Management
The document you are viewing contains questions related to this textbook.
Chapter 27 / Exercise 27-11
Intermediate Financial Management
Brigham/Daves
Expert Verified

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