months' time. The U.S. interest rate is 2% p.a., and the Swiss interest rate Assume that the current spot rate is CHFO.96/USD. Which of the followi ements is correct: The risk to the U.S. company is that the value of the Swiss franc will rise a therefore it should enter into a contract to buy Swiss francs forward The risk to the U.S. company is that the value of the Swiss franc will decli therefore it should enter into a contract to buy Swiss francs forward The risk to the U.S. company is that the value of the Swiss franc will decli therefore it should enter into a contract to sell Swiss francs forward The risk to the U.S. company is that the value of the Swiss franc will rise a therefere it chould to coll Swisc fro ncs forverd
months' time. The U.S. interest rate is 2% p.a., and the Swiss interest rate Assume that the current spot rate is CHFO.96/USD. Which of the followi ements is correct: The risk to the U.S. company is that the value of the Swiss franc will rise a therefore it should enter into a contract to buy Swiss francs forward The risk to the U.S. company is that the value of the Swiss franc will decli therefore it should enter into a contract to buy Swiss francs forward The risk to the U.S. company is that the value of the Swiss franc will decli therefore it should enter into a contract to sell Swiss francs forward The risk to the U.S. company is that the value of the Swiss franc will rise a therefere it chould to coll Swisc fro ncs forverd
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter27: Multinational Financial Management
Section: Chapter Questions
Problem 11P: Boisjoly Watch Imports has agreed to purchase 15,000 Swiss watches for 1 million francs at today’s...
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Transcribed Image Text:Consider a U.S.-based company that exports goods to Switzerland. The U.S. company
expects to receive a payment of 50,000 Swiss Francs (CHF) on a shipment of goods
in 6 months' time. The U.S. interest rate is 2% p.a., and the Swiss interest rate is 4%
p.a. Assume that the current spot rate is CHF0.96/USD. Which of the following
statements is correct:
The risk to the U.S. company is that the value of the Swiss franc will rise and
therefore it should enter into a contract to buy Swiss francs forward
The risk to the U.S. company is that the value of the Swiss franc will decline and
therefore it should enter into a contract to buy Swiss francs forward
The risk to the U.S. company is that the value of the Swiss franc will decline and
therefore it should enter into a contract to sell Swiss francs forward
The risk to the U.S. company is that the value of the Swiss franc will rise and
therefore it should enter into a contract to sell Swiss francs forward
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