Discuss the advantages and disadvantages of this method

Assignment Help Financial Management
Reference no: EM131817481

Company TJC (UK firm) is required is to purchase 1,000 ounces of pure gold from Newcrest Mining, a major gold producer in Australia. The parties have signed a supply contract at USD 1,200 per oz., with payment to be made in British pounds in 3 months' time. The exchange rate was set at GBP1 = USD 1.3200. However, contract completion is subject to approval by the relevant authorities, the outcome to be known in 2 months' time. Newcrest Mining needs to hedge the foreign gold exposure because of the increasing volatility of the pound post-Brexit. Newcrest has obtained the forward rate bid/offer quote of Australian dollars per pound, GBP 1.6400/50 for settlement in 3 months. Compute the local receipt to Newcrest if it use the forward market hedge, and discuss the advantages and disadvantages of this method.

Reference no: EM131817481

Questions Cloud

Examples of job order costing industries : Provide examples of job order costing industries versus process costing industries in both manufacturing and service industries.
Compare and contrast the selected companys statement : Compare and contrast the selected company's statement of cash flows to its income statement
Summarize the outcome of the case : Explain whether your specific case was heard in the state or federal court system, and include any related jurisdictional requirements.
What are the effects of the annuity of betty gross income : Betty died on March 31, 2011. What are the effects of the annuity of Betty's gross income and taxable income for 2011
Discuss the advantages and disadvantages of this method : Compute the local receipt to Newcrest if it use the forward market hedge, and discuss the advantages and disadvantages of this method.
Hospital for the treatment of bronchitis : A patient admitted to a hospital for the treatment of bronchitis and back pain requested from the nursing staff for someone to repair the television set
What are your personal health and illness beliefs : What are your personal health and illness beliefs? Where and from whom did you learn these beliefs? How do your beliefs affect your health?
What is meant by moving up the economic value chain : What is meant by "moving up the economic value chain," and how are CPAs going to accomplish this
Determining the misunderstood concepts : Racial, sex, and age discrimination are often misunderstood concepts. Consider the following facts and questions:

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd