Effective hedging assuming zero passthrough

Assignment Help Financial Management

Reference no: EM131607772

Dell is selling 30,000 units in Europe at an average price of €1,500 per unit. Both the spot and forward exchange rates are $1.20/€. The cost of each unit in dollars is $1,300 per unit. The elasticity of demand for Dell computers in Europe is ε = 1.5.

Which of the following would be an effective hedging assuming zero passthrough?

buy $45 million forward

sell €45 million forward

buy $20 million forward

sell €20 million forward

Reference no: EM131607772

Questions Cloud

Profit margin and payout ratio remain constant : what is the amount of external financing needed, assuming XYZ is operating at full capacity, and profit margin and payout ratio remain constant?

The elasticity of demand for dell computers in europe : Dell is selling 30,000 units in Europe at an average price of €1,500 per unit. The elasticity of demand for Dell computers in Europe is e = 1.5.

Calculate standard deviation-coefficient of variance of npv : Calculate the standard deviation of NPV and the coefficient of variance of the NPV.

What are the total fixed costs of operating the university : What are the total fixed costs of operating the university? What are the variable cost and contribution margin per student at the university?

Effective hedging assuming zero passthrough : Which of the following would be an effective hedging assuming zero passthrough?

Calculate expected return-variance and standard deviation : Calculate the expected return, variance and standard deviation for each share.

Delta for dell dollar profit assuming zero pass through : What is the delta for Dell’s dollar profit assuming zero pass through?

Company must manufacture and sell to yield before-tax profit : what is the number of units that the company must manufacture and sell to yield a before-tax profit of 20%?

Determine cost of capital-weighted average cost of capital : Santam wants to determine its cost of capital. The company is financed through bonds and ordinary shares. Calculate the weighted average cost of capital.

User Account

All Pages