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    Walt Disney: fees and rates when exchanging peso for dollar

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    Walt Disney expects to receive a Mex$16 million theatrical fee from Mexico in ninety days. The current spot rate is $0.1321/Mex$, and the ninety-day forward rate is $0.1242/Mex$.

    a. What is Disney's peso transaction exposure associated with this fee?

    b. If the spot rate expected in ninety days is $0.1305, what is the expected U.S. dollar value of the fee?

    c. What is the hedged dollar value of the fee?

    d. What factors will influence the hedging decision?

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    Walt Disney expects to receive a Mex$16 million theatrical fee from Mexico in ninety days. The current spot rate is $0.1321/Mex$, and the ninety-day forward rate is $0.1242/Mex$.
    a. What is Disney's peso transaction exposure associated with this fee? ...

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