A US company needs to make a one-time payment of 50 million dollars in Mexican Pesos in about 6 months, and would like to hedge against the risk that exchange rates may change. Describe in words the hedging strategy that the company should take. Remember that a possible answer is that the company should not be hedging at all.
A US company needs to make a one-time payment of 50 million dollars in Mexican Pesos in about 6 months, and would like to hedge against the risk that exchange rates may change. Describe in words the hedging strategy that the company should take. Remember that a possible answer is that the company should not be hedging at all.
Chapter11: Managing Transaction Exposure
Section: Chapter Questions
Problem 1ST
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A US company needs to make a one-time payment of 50 million dollars in Mexican Pesos in about 6 months, and would like to hedge against the risk that exchange rates may change.
Describe in words the hedging strategy that the company should take. Remember that a possible answer is that the company should not be hedging at all.
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