XYZ Ltd is an export oriented business house based in Mumbai. Its receipts of USD 100,000 are due on September 1, 2019. Market information June 1, 2019 is as follow: Forward Contract Future Contract Exchange Rate INR/USD Maturity INR/USD Spot 0.0214 June 0.02126 1-Month Forward 0.02136 September 0.02118 3-Month Forward 0.02127 Contract Size 100,000 USD Which currency derivative is the best to hedge the risk of XYZ Ltd?
XYZ Ltd is an export oriented business house based in Mumbai. Its receipts of USD 100,000 are due on September 1, 2019. Market information June 1, 2019 is as follow: Forward Contract Future Contract Exchange Rate INR/USD Maturity INR/USD Spot 0.0214 June 0.02126 1-Month Forward 0.02136 September 0.02118 3-Month Forward 0.02127 Contract Size 100,000 USD Which currency derivative is the best to hedge the risk of XYZ Ltd?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter22: Providing And Obtaining Credit
Section: Chapter Questions
Problem 2Q
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