Question

From the perspective of Detroit Co., which has payables in Mexican pesos, hedging the payables is...

From the perspective of Detroit Co., which has payables in Mexican pesos, hedging the payables is especially beneficial if the expected real cost of hedging the payables is:​

a.

​negative.

b.

​zero.

c.

​positive and large.

d.

​positive and small

0 0
Add a comment Improve this question Transcribed image text
Answer #1

The correct answer is option a i.e. negative i.e. From the perspective of Detroit Co., which has payables in Mexican pesos, hedging the payables is especially beneficial if the expected real cost of hedging the payables is negative

Feel free to ask in case of any query relating to this question

Add a comment
Know the answer?
Add Answer to:
From the perspective of Detroit Co., which has payables in Mexican pesos, hedging the payables is...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Celine Co. will need €500,000 in 90 days to pay for German imports. Today's 90-day forward...

    Celine Co. will need €500,000 in 90 days to pay for German imports. Today's 90-day forward rate of the euro is $1.07. The spot rate of the euro in 90 days is forecasted to be $1.02. Based on this information, the expected value of the real cost of hedging payables is $____. a. ​-25,000 b. ​25,000 c. ​-107,000 d. ​10,700

  • 5. According to the textbook, which of the following statements is (are) correct? (x) From 1960...

    5. According to the textbook, which of the following statements is (are) correct? (x) From 1960 to about 1975 in the United States, net capital outflow was small and sometimes negative and sometimes positive. (y) Most of the change from 1991 to 2000 in U.S. net capital outflow as a percent of GDP was due to a decrease in U.S. investment (z) In the U.S. from 2000 to 2006, net capital outflow as a percent of GDP became a larger...

  • 1. Which of the following real gases has the largest isobaric heat capacity, Cp: a) He...

    1. Which of the following real gases has the largest isobaric heat capacity, Cp: a) He b) Rn c) N2 d) XeF2 e) all gases have the same heat capacity 2. Predict the change in entropy (AS) for the following reaction (D is used for deuterium, H) NDaBr (s) → ND; (g) + DBr (g) a) Positive b) Negative c) Near Zero d) Exactly Zero e) none of the above 3. The values of q, w, AU and AH for...

  • Question Assume the exchange rate for the Mexican Peso is falling relative to the U.S. dollar....

    Question Assume the exchange rate for the Mexican Peso is falling relative to the U.S. dollar. An American 17 company will incur losses from this falling exchange rate if the company is making: Not yet answered Select one: Marked out of 1。a. Credit purchases from Mexican companies at prices stated in Mexican Pesos. Flag question b. Credit purchases from Mexican companies at prices stated in U.S, dollars. c.Credit sales to Mexican companies at prices stated in U.S. dollars. O d....

  • Linden Co. has 1,000,000 euros as payables due in 90 days, and is certain that euro...

    Linden Co. has 1,000,000 euros as payables due in 90 days, and is certain that euro is going to depreciate substantially over time. Assuming the firm is correct, the ideal strategy is to: a. sell euros forward b. purchase euro currency put options. c. purchase euro currency call options. d. purchase euros forward. e. remain unhedged

  • 10. From US perspective, which one is not BOP transaction? ( A The purchase of a...

    10. From US perspective, which one is not BOP transaction? ( A The purchase of a US Treasury bill by a foreign resident B UC Berkeley has purchased a number of office supplies at local Wal-Mart D The purchase of a glass figure in Venice by an American tourist C Imports Japanese cameras 11. Purchases of stock that are too small to be considered foreign direct investment are classified as ( A depreciation C portfolio investment B investment spending D...

  • 22. Under which of the following assumptions would the nominal interest rate be equal to the...

    22. Under which of the following assumptions would the nominal interest rate be equal to the real interest rate? (a) expected inflation is equal to the nominal interest rate (b) expected inflation is equal to the real interest rate (c) expected inflation is negative (d) expected inflation is equal to zero (e) none of the above 23. If the nominal interest rate is less than the real interest rate, we know that (a) both the nominal or real interest rate...

  • 26. The internal energy can be increased by a) transferring heat from the surroundings to the...

    26. The internal energy can be increased by a) transferring heat from the surroundings to the ystem (b) transferring heat from the system to the surroundings c) doing work on the system A) a only B)b only C) c only D) a and c E) b and e 27. For the species in the reaction below, AHf is zero for 2Co (s) + H2 (3)+ 8PF3 () 2HCo(PF3)4) A) Co (s) B) H2 (3) C) PF3 (8) 1D) HCo(PF3)40 E)...

  • U. LASI TUWS Must te positive Lave you 16. Which of the following would you feel safest in accepting? Assume MARR t...

    U. LASI TUWS Must te positive Lave you 16. Which of the following would you feel safest in accepting? Assume MARR to be 12% for each proje (Hint: Consider IRR/PW graph) a. "A" has a small but negative net present worth. "B" has a positive net present worth when discounted at 10%. c. "C's" cost of capital exceeds its rate of return. d. "D" has a zero net present worth when discounted at 14%.

  • Question: From a management policy perspective, which regression result is the most useful? A) A regression...

    Question: From a management policy perspective, which regression result is the most useful? A) A regression equation whose explanatory variables all pass the t-test B) A regression equation that has the highest R2 C) A regression equation that has the least number of dummy variables D) A regression equation that passes the F-test

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
Active Questions
ADVERTISEMENT