Working for us based multinational firm

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Reference no: EM131853975

Lisa started working for a US based multinational firm. She noticed that the company had recently entered into a contract to sell a large machine worth 5 million euros. The payment was to be delivered 180 days from now. Concerned with the currency risk exposure she entered into a forward contract to sell 5 million euros for US dollars 180 days from now. When her manager came to know of the forward contract he was furious and he told her that she had actually created exposure instead of hedging it. She was asked never to act again in this manner because she does not understand the overall picture yet. Provide possible reasons behind this situation.

Reference no: EM131853975

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