Business, 18.03.2020 20:03 rk193140

Your firm is a U. K.-based importer of bicycles. You have placed an order with an Italian firm for €1,000,000 worth of bicycles. Payment (in euro) is due in 12 months.

Detail a strategy using futures contracts that will hedge your exchange rate risk. Have an estimate of how many contracts of what type and maturity.

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Answer from: Esmer1030

Complete question:

Your firm is a U.K.-based importer of bicycles. You have placed an order with an Italian firm for €1,000,000 worth of bicycles. Payment (in euro) is due in 12 months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Have an estimate of how many contracts of what type and maturity

A. Go short 100 12-month euro futures contracts; and short 80 12-month pound futures contracts.

B. Go long 100 12-month euro futures contracts; and long 80 12-month pound futures contracts.

C.Go long 100 12-month euro futures contracts; and short 80 12-month pound futures contracts.

D. Go short 100 12-month euro futures contracts; and long 80 12-month pound futures contracts.E. None of the above

Go short 100 , 12-month euro futures contracts; and long 80, 12-month pound futures contracts. Option c is correct.

Explanation:

Buy €1m (a long position) forward using futures contracts, at the 12-month forward rate of $1.60 per €1 pay

$1,600,000 = €1,000,000 ×$1.60/€1.

At the 12-month forward rate of $2/≤this is worth ≤800,000.

Go short pound futures contracts.

so , Go long 100 12-month euro futures contracts; and short 80 12-month pound futures contracts.

Answer from: Quest

net worth is the difference between what you own and what you have. if you exceed your liabilities you have a positive net worth. if your liabilities are greater than your assets you have a negative net worth. its a snapshot of your financial situation. if you calculate your net worth you will see the end result of everything you've earned and spent as of now. net worth statements and all you asked of can you determine where you are, how to get where you want to be, if your spending to much. honestly it can tell you a lot of things. i can go on, but you can paint the picture from here.

explanation:

Answer from: Quest

answer; radioactive decay)

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