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

Global crisis, Chose a problematic situation that is related to your workpl...

Chose a problematic situation that is related to your workplace and use the following approach to investigate it. Part A:    i-  Give a brief description of the situation.

What are the main aspects of economic life, Q. What are the main points of...

Q. What are the main points of economic life that macroeconomics analysis is most concerned with? Answer: There are four major aspects that are saving, unemployment, trade imb

Why is the u.s. dollar considered a vehicle currency, Q. Explain what a "v...

Q. Explain what a "vehicle currency" is. Why is the U.S. dollar considered a vehicle currency? Answer: A vehicle currency is one specifically widely used to denominate inter

Persistence of protectionism, Q. It is claimed that the persistence of pro...

Q. It is claimed that the persistence of protectionism is often the result of the fact that those who lose from trade are usually a much more informed, cohesive and motivated a gr

Getting the Benefits from Technological Progress, What is the significance ...

What is the significance of the observations made by OECD in this case study regarding “The OECD economies are more strongly dependent on the production, distribution and use of kn

Compare currency board to conventional fixed exchange rate, Q. Compar...

Q. Compare currency board to conventional fixed exchange rate? Answer: Currency board mayn't acquire domestic assets and therefore cannot lend currency freely to domesti

Effect of a permanent increase in the money supply, Q. Explain the followin...

Q. Explain the following figure: Answer: The figure depict the effect of a permanent increase in the money supply starting from full employment equilibrium. Subsequent to the i

Differences between absolute ppp and relative ppp, Q. Discuss the d...

Q. Discuss the differences between Absolute PPP and Relative PPP. Answer: Absolute Purchasing Power Parity (PPP) states that the exchange rate between two currencies e

International trade, explain the product cycle theory in international trad...

explain the product cycle theory in international trade

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