Describe the foreign exchange market

Reference no: EM133290489

Question 1: Describe the foreign exchange market. Where is it located, how does it operate?

Question 2: What are derivatives and what are some types of derivatives?

Question 3: Describe the derivatives market. Where is it located, how does it operate?

Question 4: Describe a forward hedge. What is it and when is its use appropriate?
With the information found below, calculate a forward hedge. If the firm uses this hedge, what is the gain or loss? Place the full calculation (showing all work) in an appendix.

Question 5: Is a forward hedge a derivative? Why or why not?

You are a manager of a US firm that makes precision medical diagnostic equipment in Denver, CO. In May 2020 you received an order for 200 Model CQ machines from Japan. Payment of 88,000 JPY (Japanese Yen) is due in May 2021. (One year lead time.) You open the newspaper and find the following information.

Reference no: EM133290489

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