Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. . in may 2020, the american company berrings place

. In May 2020, the American company Berrings placed an order with the Italian company...

60.1K

Verified Solution

Question

Finance

. In May 2020, the American company Berrings placed an order with the Italian company Maschetti for an amount of 500,000 and during the same period, it acquired a forward contract for the purchase of 500,000 at a forward rate of $1.29/ in May 2021.

a) If in May 2021, the exchange rate is $1.45/, how much would Bertolli company have to pay in dollars in May 2021?

b) Assuming that there are no transaction costs (i.e., hedging is "free"), what is the expected impact of the currency risk hedging on the cash flows of this company (in terms of variability and value)?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

From the Income Statement, Balance Sheet, and Statement ofChanges in Owners’ Equity, and Statement...

Accounting
Q

Please i need a detailed explanation of this short article Thinking of the many variables tracked...

Statistics
Q

Explain how people can use classification systems to diagnose abnormal behavior with reference to the ways...

Psychology
Q

Which of these are actual evidence for the existence of a black hole in the center...

Physics
Q

You may need to use the appropriate appendix table or technology to answer this question...

Statistics
Q

Please help me urgent i will give good rating

Accounting
Q

Non-GAAP performance measures PLANET FITNESS NOTE: In order to best answer these questions below, please...

Accounting
Q

Answers in red are incorrect. Number are all fine I just need help figuring out...

Accounting
Q

The balance sheet for Rami Corp. is shown here in market value terms. There are...

Finance
Q

An investment will offer $475 per year forever, starting 7 years from today. If the...

Finance
Q

Olsen Outfitters Inc. believes that its optimal capital structure consists of 65% common equity and...

Finance
Q

What entities or business forms are available for a new enterprise? Explain the advantages and...

Accounting