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Johnson & Johnson, Inc., a U.S.-based MNC, will need 15 million Brazilian Reals on December 1. It is now September 1. Johnson & Johnson has negotiated a non- deliverable forward contract with its bank. The reference rate is the Brazilian Real's closing exchange rate (in $) quoted by Brazil's central bank in 90 days. The Braziliam Real's spot rate today is $.22. If the rate quoted by Brazil's central bank on December 1 is $.26, Johnson will, pay; 600,000 be paid; 60,000 be paid; 600,000

Johnson & Johnson, Inc., a U.S.-based MNC, will need 15 million Brazilian Reals on December 1. It is now September 1. Johnson & Johnson has negotiated a non- deliverable forward contract with its bank. The reference rate is the Brazilian Real's closing exchange rate (in $) quoted by Brazil's central bank in 90 days. The Braziliam Real's spot rate today is $.22. If the rate quoted by Brazil's central bank on December 1 is $.26, Johnson will, pay; 600,000 be paid; 60,000 be paid; 600,000

International Financial Management
International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter11: Managing Transaction Exposure
Section: Chapter Questions
Problem 4ST
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Johnson & Johnson, Inc., a U.S.-based MNC, will need 15 million Brazilian Reals on December 1. It is now September 1. Johnson & Johnson has negotiated a non- deliverable forward contract with its bank. The reference rate is the Brazilian Real's closing exchange rate (in $) quoted by Brazil's central bank in 90 days. The Brazilian Real's spot rate today is $.22. If the rate quoted by Brazil's central bank on December 1 is $.26, Johnson will, pay; 600,000 be paid; 60,000 be paid; 600,000 pay; 60,000 $_
Transcribed Image Text:Johnson & Johnson, Inc., a U.S.-based MNC, will need 15 million Brazilian Reals on December 1. It is now September 1. Johnson & Johnson has negotiated a non- deliverable forward contract with its bank. The reference rate is the Brazilian Real's closing exchange rate (in $) quoted by Brazil's central bank in 90 days. The Brazilian Real's spot rate today is $.22. If the rate quoted by Brazil's central bank on December 1 is $.26, Johnson will, pay; 600,000 be paid; 60,000 be paid; 600,000 pay; 60,000 $_
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