Dr Nick

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About Dr Nick

Levels Tought:
Elementary,Middle School,High School,College,University,PHD

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Art & Design,Computer Science See all
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Teaching Since: May 2017
Last Sign in: 340 Weeks Ago
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Education

  • MBA (IT), PHD
    Kaplan University
    Apr-2009 - Mar-2014

Experience

  • Professor
    University of Santo Tomas
    Aug-2006 - Present

Category > Business & Finance Posted 20 Jun 2017 My Price 15.00

Switzerland. The U.S. Company

    Consider a U.S.-based company that imports goods from Switzerland. The U.S. Company expects to make payment on a shipment of goods in six months. Because the payment will be in Swiss francs, the U.S. Company wants to hedge against a negative change in the value of the Swiss franc over the next six months.  The U.S. risk-free rate is 2 percent, and the Swiss risk-free rate is 6 percent. Assume that interest rates are expected to remain fixed over the next six months. The current spot rate is USD0.5842/1CHF

a.    Indicate whether the U.S. Company should use a long or short forward contract to hedge currency risk.

b.    Calculate the no-arbitrage price at which the U.S. Company could enter into a forward contract that expires in six months. 

 

Answers

Dr Nick
(4)
Status NEW Posted 20 Jun 2017 09:06 AM My Price 15.00

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