Stover Coproation, A U.S. based importer, makes a purchase of crystal glassware from a firm...
60.1K
Verified Solution
Link Copied!
Question
Accounting
Stover Coproation, A U.S. based importer, makes a purchase of crystal glassware from a firm in Switzerland for 39,90 Swiss francs, or $24,000, at the spot rate of 1.665 Swiss franc per dollar. The terms of the purchase are net 90 days, and the U.S. firm wants to cover this trade payble with a forward market hedge to eliminate its exchange rate risk. Suppose the firm completes a forward hedge at the 90-day forward rate of 1.682 Swiss francs. If the spot rate in 90 days is actually 1.615 Swiss franc, how much in U.S. dollards will the U.S. frim have saved or lost by hedging its exchange rate exposure? Do not round
a. $916.61
b. $985.60
c. $926.47
d. $1,212.29
e. $965.89
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!
