How many us dollars must be raised

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Reference no: EM13529080

A U.S. company orders merchandise from a Japanese company at a cost of 100 million yen. The merchandise must be paid for in yen

 


Yen per $1 $ per 1 yen
Spot 97.57 0.01025
30-day forward 97.45 0.01026
90-day forward 96.31 0.01038
180-day forward 92.45 0.01082

a. How many U.S. dollars must be raised if payment is due today?

b. Is the dollar appreciating or depreciating against the yen? Explain.

c. How many U.S. dollars must be raised if payment is due in 90 days?

d. Who bears exchange rate risk, the U.S. company or the Japanese company or both? Explain.

e. Describe 3 ways in which the company can reduce exchange rate risk.

Reference no: EM13529080

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