What is the dollar-cost of the shipment

Assignment Help Finance Basics
Reference no: EM13300055

Suppose the exchange rate on the 180-day forward contract on the Swiss franc is $0.80 per Swiss franc. Current spot exchange rate is $0.70. You live in the U.S. but are considering the purchase of a shipment of Swiss watches costing 10 million Swiss francs. The merchant in Zurich has promised you that the cost of the shipment will not change over the next 180 days. But you worry that the dollar will weaken further against the Swiss franc, making the dollar-cost of the shipment more expensive than at present. To hedge this foreign exchange risk, you buy the 180-day forward contract on Swiss francs at the quoted rate. Without a forward contract, what is the dollar-cost of the shipment if the spot exchange rate at the time of purchase is $0.75?

Reference no: EM13300055

Questions Cloud

What is the time value of the call option : An option on a stock has the following data: S = $60.36; E = $60; r = 1.75%; T = 18 days; std dev = 0.674 (i.e. 67.4%); market price of call = $3.50.
Calculate the total cost in usd : To hedge this foreign exchange risk, you buy the 180-day forward contract on Swiss francs at the quoted rate. With a forward contract, calculate the total cost in USD.
What is the debt ratio : ABC Company has a debt-equity ratio of 0.77. What is the debt ratio?
What is the tube length of the microscope : To make a simple microscope a student places two converging lenses of +20 D at opposite ends of a 34 cm long tube. What is the tube length of the microscope
What is the dollar-cost of the shipment : Without a forward contract, what is the dollar-cost of the shipment if the spot exchange rate at the time of purchase is $0.75?
What is the location of the final image : An object is located 15 cm in front of (to the left of) a converging lens with a focal length of 10 cm. To the right of the converging lens, What is the location of the final image
What is the firm expected stock price 5 years from now : If dividends are expected to grow at a constant rate, g, in the future, and if ke is expected to remain constant at 12 percent, what is the firm's expected stock price 5 years from now?
Tomey supply company financial statements : Tomey Supply Company financial statements for the most recent fiscal year are shown below. The company management projects that sales will increase by 20 percent next year.
Determine the energy of the recoiling electron : X-rays having an energy of 350 keV undergo Compton scattering from a target. The scattered rays are detected at 37.0° relative to the incident rays. Find the energy of the recoiling electron

Reviews

Write a Review

Finance Basics Questions & Answers

  Define simple interest and compound interest

Discuss and explain simple interest and compound interest. Describe the difference between each.

  What would the cost of equity from new stock be

If the company were to issue new stock, it would incur a 14% flotation cost. What would the cost of equity from new stock be? Round your answer to two decimal places.

  Contrast the essential characteristics of each

Contrast the essential characteristics of each of these three derivative instruments.

  Compute additional funds needed

The corporation's fixed assets were used to only 50% of capacity during 2005, but its current assets were at their proper levels. All assets except fixed assets rise at the same rate as sales,

  Calculating nominal cash flow

Etonic Inc. is considering an investment of $365,000 in an asset with an economic life of 5 years. The company estimates that the nominal yearly cash revenues and expenses at the end of the 1st year will be $245,000

  Determine sensitivities of the portfolio

Based on a three factor model, consider a portfolio composed of three securities with the following characteristics, determine the sensitivities of the portfolio to factors 1, 2, and 3?

  What kind of deal did the athelete snag

If the appropriate interest rate is 8 percent, what kind of deal did the athelete snag? Assume all payments other than the first $4.00 million are paid at the end of the year.

  What is the estimated price of a call option

If the put premium is $18.00 and interest rates are 0.5% per month, what is the estimated price of a call option with an exercise price of $830?

  Calculating annual payment of mortgage

You're thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash which you can use as a down payment on house, but you need to borrow the rest of purchase price.

  What are the gifting tools used to gift to minors

Plese explain the process of gifting in estate planning. More specifically, what are the gifting tools used to gift to minors and what are the advantages/disadvantages of each?

  How does boeing achieve a cash cycle of negative 100 days

Why is Amazon's cash cycle so much shorter than that of competitor Barnes & Noble? How does this comparison affect financial management decisions of other retailers?

  Estimate the continuation value

Estimate the continuation value using the market/book ratio.

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