Business, 01.04.2020 16:30 phillipsangela014

Your firm is a U. K.-based exporter of bicycles. You have sold an order to a Swiss firm for SFr. 1,000,000 worth of bicycles. Payment from the Swiss firm (in Swiss francs) is due in 12 months. Detail a strategy using futures contracts that will hedge your exchange rate risk. Have an estimate of how many contracts of what type and maturity.

U. S. $ equiv. Currency per U. S. $

Contract Size Country Tuesday Monday Tuesday Monday

£ 10,000 Britain (pound) $ 1.9600 $ 1.9400 £ 0.5102 £ 0.5155

1 month forward $ 1.9700 $ 1.9500 £ 0.5076 £ 0.5128

3 months forward $ 1.9800 $ 1.9600 £ 0.5051 £ 0.5102

6 months forward $ 1.9900 $ 1.9700 £ 0.5025 £ 0.5076

12 months forward $ 2.0000 $ 1.9800 £ 0.5000 £ 0.5051

€ 10,000 Euro $ 1.5600 $ 1.5400 € 0.6410 € 0.6494

1 month forward $ 1.5700 $ 1.5500 € 0.6369 € 0.6452

3 months forward $ 1.5800 $ 1.5600 € 0.6329 € 0.6410

6 months forward $ 1.5900 $ 1.5700

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Your firm is a U. K.-based exporter of bicycles. You have sold an order to a Swiss firm for SFr. 1,0...

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