Your company will have to make a payment of A$500,000 in 180 days. The 180-day forward...
Your company will have to make a payment of A$500,000 in 180 days. The 180-day forward rate in the Australian dollar is $0.68. The current spot rate is $0.65. If you use a forward hedge, you will:
- receive $340,000 today.
- receive $340,000 in 180 days.
- pay $340,000 in 180 days.
- receive $325,000 today.
- pay $735,294 in 180 days.
Homework Answers
1 Australian $ = $0.68
Forward rate 1 Aus $= $0.68
If forward hedge has to be taken then, payment will be
A$ 500,000 * $0.68
= $340,000
Pay $340,000 in 180 days
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