What would be amount in us dollars

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Reference no: EM13137218

Suppose that OSG undertakes the same mandatory hedging policy as S. Corporation, the American company whose minimum forward-cover schedule is shown in Exhibit 9. Apply this schedule to the US$1million account receivable case for OSG. OSG expected to receive a US dollar (foreign currency) payment of US 1 million in three months. The spot rate was ¥115.03/$), and the forward rate ¥116.18/$) as shown in Appendix 1. Use Exhibit 10 for minimum forward-cover. Note that the yen is the home currency for OSG.

i. What would be the amount of forward cover required?

ii. If the spot rate in three months was expected to be ¥110/$, what would be the amount in US dollars, covered and uncovered?

iii. What would be the expected total end-of-period yen value of the position taken in part (2)? Suppose the spot rate in three months will be ¥115.00/$).

Reference no: EM13137218

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