A US company expects to pay 4,000,000 Japanese yen 30 days from now. It decides to hedge thee position by buying Japanes
Posted: Wed Apr 06, 2022 9:08 am
A US company expects to pay 4,000,000 Japanese yen 30 days from
now. It decides to hedge thee position by buying Japanese yen
forward. The current spot rate of the yen is $.0089, while the
forward rate is $0.0077. The firm expects the spot rate in 30 days
to be $.0094. Based on its expectations the company enters into
derivative contracts to maximize its profits. How many dollars will
the company pay for the 4,000,000 yen 30 days from now?
now. It decides to hedge thee position by buying Japanese yen
forward. The current spot rate of the yen is $.0089, while the
forward rate is $0.0077. The firm expects the spot rate in 30 days
to be $.0094. Based on its expectations the company enters into
derivative contracts to maximize its profits. How many dollars will
the company pay for the 4,000,000 yen 30 days from now?