Determination of minimum amount

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Reference no: EM13105839

In January 2d, 2014, Nestle expects to ship 1,000,000 boxes of Nestle Crunch Chocolate from its Swiss plant to the US that it will sell through retail outlets on 270-day terms at 150 SF each. So Nestle will receive payment from these outlets on September 28th, 2014. Assuming that Nestle needs to cover its expenses in Switzerland and thus wants to hedge its SF/US$ exposure using a forward contract with a Swiss bank, what is the minimum amount of Swiss Francs they should receive on September 28th, 2014 given the 9-month forward rate for one US dollar in terms of Swiss Francs you calculated in problem one? What are two other ways Nestle might hedge its SF/US$ exposure?

Reference no: EM13105839

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