Mathematics · Foreign Exchange Risk Management
Shadow Co, which has a home currency of dollars, orders goods from a foreign supplier. A payment of £400,000 is due to the supplier in four months' time. The financial manager has decided to hedge the foreign currency risk using the forward market. Bank Quotes: Spot rate (£ per $): 0.790 - 0.795 Four month forward rate (£ per $): 0.775 - 0.783 What is the amount payable in dollars, using a forward market hedge (to the nearest dollar)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1$503,145
- 2$506,329
- 3$510,856
- 4$516,129✓
Correct answer
$516,129
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