Business, 15.04.2020 02:01 jordanrini

On January 1st, Madison Co. ordered raw material from Japan and agreed to pay 100 million yen for this order on April 1st. It negotiated a 3-month forward contract to obtain 100 million Japanese yen on that date at $.009. On February 1st, the Japanese firm informed Madison Co. that it won't be able to fulfill that order. The Japanese yen spot rate on February 1st is $.0087 and 2-month forward rate exhibits 3% discount. To offset its existing contract what kind of forward contract should Madison Co. negotiate? And what will be the profit/loss in U. S. dollars generated from this transaction?

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On January 1st, Madison Co. ordered raw material from Japan and agreed to pay 100 million yen for th...

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