Hedge thee position by buying japanese yen forward

Assignment Help Financial Management

Reference no: EM131351669

A US company expects to pay 2,500,000 Japanese yen 30 days from now. It decides to hedge thee position by buying Japanese yen forward. The current spot rate of the yen is $.0089, while the forward rate is $0.0090. The firm expects the spot rate in 30 days to be $.0094. Based on its expectations the company enters into derivative contracts to maximize its profits. How many dollars will the company pay for the 5,000,000 yen 30 days from now?

Reference no: EM131351669

Questions Cloud

Injury mechanism-all other leading causes : Using the same criteria as above, select at topic of your choice from the heading "Injury Mechanism & All Other Leading Causes" which state (of the two that you have chosen) has the higher rates of your selected cause?

Explains how each of four sources will aid in development : Develop an Annotated Bibliography that summarizes and explains how each of 4 sources will aid in development of your upcoming Problem/ Solution Essay.

The company goes through with recapitalization : RAK, Inc., has no debt outstanding and a total market value of $220,000. Earnings before interest and taxes, EBIT, are projected to be $40,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 10 percen..

How your thesis will guide the body paragraphs of your essay : Discuss why placing your thesis statement as the final sentence of your introduction is important. Discuss how your thesis will guide the body paragraphs of your essay

Hedge thee position by buying japanese yen forward : A US company expects to pay 2,500,000 Japanese yen 30 days from now. It decides to hedge thee position by buying Japanese yen forward. The current spot rate of the yen is $.0089, while the forward rate is $0.0090. How many dollars will the company pa..

What percent of the data is in the interval 22-26 : A set of 500 values is normally distributed with a mean of 24 and a standard deviation of 2.

What will be the counselors role with this client : What concepts of the theory make it the most appropriate for the client in the case study?Why did you choose this theory over the others?What will be the goals of counseling and what intervention strategies are used to accomplish those goals?Is the t..

Firm capital structure and estimated capital costs : The table below shows a firm's capital structure and estimated capital costs. Calculate this firm's weighted average cost of capital.

What is the cost of new common equity capital : The current dividend for a corporation is $3.73. The dividend is expected to increase by 12%. and it is expected to continue that rate of growth for the foreseeable future. Given their stock is trading at $38 per share and it cost $3.37 per share to ..

User Account

All Pages