Suppose a producer or N-95 Respirator Masks exports some of its product up to Canada. It expects its invoice of C$18,000,000 for its export to Canada to be paid in 90-days. The current spot and the 90-day forward rates are $0.7502/$C1 and $0.7422/$C1 respectively.
Calculate the company's Canadian dollar transaction exposure associated with this fee.
If the spot rate in 90-days is $0.7489, what is the expected U.S. dollar value of the invoice?
What are the types of hedges and the value to this invoice?
Suppose a U.S. manufacturer, Patton-Stillwell (P-S, Inc), sells its merchandise on account to a firm in the Netherlands for €1,800,000 (euro) expecting payment to be made in 60-days. The spot rate is currently S0 = $1.09/€.
What amount of dollars is Patton-Stillwell expecting on payment for its merchandise?
If the euro weakens against the dollar to $1.03/€, then P-S will expect to receive how much when the euro are converted to dollars?
If the euro strengthens against the dollar to $1.15/€, then P-S will expect to receive how much in exchange for their merchandise?
A U.S.-based MNC imports 30% of its supplies from Europe. Exports to Europe which are invoiced in euros, account for almost 50% of this firm's revenues. In 250-350 words, please explain how this firm can reduce its economic exposure to exchange rate and interest rate fluctuations.
Your entries must be presented in a 4 page Word document; if you do any calculations in Excel, copy and paste them from Excel into the Word document. Make sure your entries are clearly summarized and presented so your instructor knows which transactions your responses are answering.
Your paper should be 4 pages in length and conform to updated APA guidelines