Assume Shiseido in Japan invoices exports to Macy's in the U.S. in U.S. dollars. Assume that...
Assume Shiseido in Japan invoices exports to Macy's in the U.S. in U.S. dollars. Assume that the forward rate and spot rate of the Japanese yen are equal. If Shiseido expects the U.S. dollar to _______ against the yen, it would likely wish to hedge. It could hedge by _______ dollars forward.
Homework Answers
Shiseido in Japan invoices exports to Macy's in the U.S. in U.S. dollars. Shiseido is going to receive U.S. dollars. The hedge is needed only if the U.S. dollar is expected to depreciate against the yen.
If Shiseido expects the U.S. dollar to depreciate against the yen, it would likely wish to hedge. It could hedge by shorting dollars forward. This means agreeing to sell the dollars forward at a rate fixed today.
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Assume Shiseido in Japan invoices exports to Macy's in the U.S.
in U.S. dollars. Assume that...
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