Hedge their euro and dollar exposure

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On January 2d, 2014, Microsoft expects to ship 1,000,000 new X-Boxes from its US plant, which it will sell through EU dealers on 270-day terms at 250 Euro each. So Microsoft will receive payment from its dealers on September 28th, 2014. Assuming that Microsoft needs to cover its expenses in the US and thus wants to hedge its Euro/US$ exposure using a forward contract with a US bank, what is the minimum amount of US dollars they should receive on September 28th, 2014 given the 9-month forward rate for one Euro in terms of US dollars that you calculated in problem one? What are two other ways Microsoft could hedge their Euro/US$ exposure?

Reference no: EM13768316

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