Forward hedging, International Economics

Assignment Help:
Assume that Deborah Electronics expects a delivery of Fujitsu laptops in a month from a Japanese supplier. Each laptop sells at $1000 in a retail market whereas the import cost is 90000 yen per unit. The spot exchange rate today is 95.238 yen per us dollar, but in 30 days the dollar is expected to depreciate to 86.956 yen. Deborah Electronics can either wait for a month or enter a 30 days forward exchange deal with bank of america to buy yen forward at 92.308 yen per dollar. Calculate profit per laptop under each scenario and suggest Deborah Electronics the better option.

Related Discussions:- Forward hedging

Policy tool under fixed exchange rates, Q. "A monetary policy is not ...

Q. "A monetary policy is not a policy tool under fixed exchange rates." Discuss. Answer: It is True Under fixed exchange rates domestic asset transactions by the centr

How are such cartel expected to help the developing country, Q. Developing...

Q. Developing countries have often attempted to establish cartels so as to counter the perceived or actual inexorable downward push on the prices of their exported commodities. OP

Effects of permanent increase in united states money supply, Using 4 differ...

Using 4 different figures, plot the time paths showing the effects of a permanent increase in the United States money supply on: A.              U.S. money supply. B.

Germanys economic welfare, Q. At the conclusion of World War I, Germany, a...

Q. At the conclusion of World War I, Germany, as a punishment, was obliged to take a large transfer to France in the form of reparations. Is it possible that the actual reparation

Describe the effects of the smoot-hawley tariff, Q. Describe the effects of...

Q. Describe the effects of the Smoot-Hawley tariff imposed by the United States in 1930. Answer: It had a damaging consequence on employment abroad. The foreign response occu

Trade barriers, why do nations impose trade barriers

why do nations impose trade barriers

Calculus, Application of defferential calculus in economics

Application of defferential calculus in economics

Ppp theory with regard to the real exchange rates, Q. What are the pr...

Q. What are the predictions of the PPP theory with regard to the real exchange rates? Answer: The real exchange rate among two countries is a broad summary measure of

Theories about the problems of lower income countries, Theories about the P...

Theories about the Problems of LICs are discussed below: In order to explain this big problem of poverty and of the asymmetric ownership of the wealth and income in the world,

Write Your Message!

Captcha
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