The treasurer of a U.S. company purchases pounds with 3 million dollars to hedge a British goods purchase. Directly afte
Posted: Thu Apr 28, 2022 1:26 pm
The treasurer of a U.S. company purchases pounds with 3 million
dollars to hedge a British goods purchase. Directly after, he is
told that they no longer need to purchase the goods. He then sells
the pounds back for dollars. Assume the bid rate is $1.4992/£ and
the ask rate is $1.5000/£, how much will the treasurer lose or gain
approximately? Select one: a. lose £1,600 b. gain £1,600 c. lose
$1,600 d. gain $1,600
dollars to hedge a British goods purchase. Directly after, he is
told that they no longer need to purchase the goods. He then sells
the pounds back for dollars. Assume the bid rate is $1.4992/£ and
the ask rate is $1.5000/£, how much will the treasurer lose or gain
approximately? Select one: a. lose £1,600 b. gain £1,600 c. lose
$1,600 d. gain $1,600