Explore BrainMass

Explore BrainMass

    Hedging using forward contract

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    5. Intel Corporation has Euros 100 million payables due in 90-days. The current spot exchange rate is $1.2025/Euro. The 90-day forward rate is $1.2100/Euro. If Intel wants to hedge its payables in Euro 100 million, suggest a suitable hedging strategy using the forward contract and compute the total cost with the forward rate? If 90-days later the spot rate turned out to be $1.0251/Euro, compute any cost advantage/disadvantage to hedging using the forward contract.

    © BrainMass Inc. brainmass.com June 3, 2020, 8:40 pm ad1c9bdddf
    https://brainmass.com/business/business-law/hedging-using-forward-contract-148127

    Solution Preview

    5. Intel Corporation has Euros 100 million payables due in 90-days. The current spot exchange rate is $1.2025/Euro. The 90-day forward rate is $1.2100/Euro. If Intel wants to hedge its payables in Euro 100 million, suggest a ...

    Solution Summary

    Illustrates the use of forward contract for hedging.

    $2.19

    ADVERTISEMENT