Please use this information to answer the question below: A US firm's expected Accounts Receivables from Canada due in 90 days Current Spot Rate (SR) for CAD The 90-day Forward Rate for CAD CAD 2,000,000 $0.70 $0.68 If the US firms uses a forward hedge, estimate the cost of hedging the receivable if the spot rate for CAD 90 days later turns out to be $0.65 O $100,000 O<$100,000 > $60,000 < $60,000 >

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section: Chapter Questions
Problem 30P
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Please use this information to answer the question below:
A US firm's expected Accounts Receivables from Canada
due in 90 days
Current Spot Rate (SR) for CAD
The 90-day Forward Rate for CAD
If the US firms uses a forward hedge, estimate the cost of hedging the receivable if the spot rate for CAD 90 days later turns out to be
$0.65
$100,000
O$100,000 >
$60,000
CAD 2,000,000
$0.70
$0.68
< $60,000 >
Transcribed Image Text:Please use this information to answer the question below: A US firm's expected Accounts Receivables from Canada due in 90 days Current Spot Rate (SR) for CAD The 90-day Forward Rate for CAD If the US firms uses a forward hedge, estimate the cost of hedging the receivable if the spot rate for CAD 90 days later turns out to be $0.65 $100,000 O$100,000 > $60,000 CAD 2,000,000 $0.70 $0.68 < $60,000 >
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