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.
1. Use a money market hedge to redenominate this one-year receivable into a pound-denominated receivable with a one-year maturity.
Contract size Country U. S. $ Equiv. Currency per U. S. $
£ 10,000 Britain (pound) $ 1.9600 £ 0.5102 interest APR rates
12 months forward $ 2.0000 £ 0.5000
€ 10,000 Euro $ 1.5600 € 0.6410 i$ = 1 %
12 months forward $ 1.6000 € 0.6250 i€ = 2 %
SFr. 10,000 Swiss franc $ 0.9200 SFr. 1.0870 i£ = 3 %
12 months forward $ 1.0000 SFr. 1.0000 iSFr. = 4 %
The following were computed without rounding. Select the answer closest to yours.
a. €1,244,212.10
b. €1,225,490.20
c. €1,219,815.78
d. €1,250,000
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “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 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
A monopolist introduces a technological innovation that lowers the marginal cost and average cost of production. The price of the good and the level of output are most likely to change in which of the following ways: A.
Answers (2)
A pool has a bad lining and a non-working pump. What should the buyer's agent tell their client about this situation and its effect on the price of the home?
Answers (1)
A British Tran jet costs $55,000,000 and is expected to fly 500,000,000 miles during its life Residual value is expected to be zero because the plane was used when acquired.
Answers (1)
BTR Co. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bonds have a par value of $1,000, and their current market price is $1,160.35. However, BTR Co.
Answers (1)
Sheridan Company uses a periodic inventory system. For April, when the company sold 450 units, the following information is available.
Answers (1)
New Questions in Business
Why would an advertiser use a mixed-media approach? It is less expensive than a homogeneous media mix It gives more exposure than a heterogeneous media plan It is easier to schedule than any other type of media mix It produces an effect where the
Answers (1)
Select the answer that best decribes what an opportunity cost is
Answers (1)
Suppose the U. S. government encouraged consumers to trade in their old automobiles for more efficient, new models by paying up to $5,000 for the old automobiles.
Answers (1)
What are the principal accounting reports involved in the financial reporting process? in general terms, what is the purpose of these reports?
Answers (1)
Using technological tools to craft reports and proposals a. reduces the mechanical work involved in developing long reports and proposals. b. eliminates the need for the writer to do any work. c.
Answers (1)