User Account

All Pages

How can rodgers hedge its foreign currency risk

Assignment Help Financial Management
Reference no: EM131524892

Can someone double check this answer? It is NOT "b" according to my practice test.

Rodgers Inc. is imports paper from Shanghai China. In a typical transaction Rodgers receives a delivery of paper from the Chinese Company and pays the company in Yuan. In all transactions, the amounts and payments are set today, but all deliveries, payments, and revenues come 90 days later. How can Rodgers hedge its foreign currency risk?

a. Contract to buy dollars in the futures market today at an agreed upon price in 90 days.

b. Contract to sell Yuan in the futures market today at an agreed upon price in 90 days.

c. Contract to buy Yuan in the futures market today at an agreed upon price in 90 days.

d. Contract to buy call options on dollars today with expiration in 90 days.

e. Contract to buy put options on Yuan today with expiration in 90 days.

Someone answered this previously posted question with the answer being "B" but that is not the correct answer according to my practice test.

Reference no: EM131524892

Questions Cloud

How much will you pay for the company stock today : If you require a return of 9 percent on your investment, how much will you pay for the company’s stock today?
What is the administrative fee for the year : Your average account value during the year is $200,000. What is the administrative fee for the year?
Rate of return-economy probability of state of economy stock : Rate of Return if State Occurs State of Economy Probability of State of Economy Stock A Stock B Recession 0.10 0.03 -0.17 Normal 0.60 0.07 0.13
Identify the main sections of the balance sheet : From our readings identify the main sections of the Balance Sheet and provide an explanation of each.
How can rodgers hedge its foreign currency risk : Rodgers Inc. is imports paper from Shanghai China. How can Rodgers hedge its foreign currency risk?
What is the level of current liabilities for project : What is the level of current liabilities for project A expected to be at time 1 if the level of current assets for project A
What is the level of current assets for project : What is the level of current assets for project A expected to be at time 1 if the level of current liabilities for project A
Cash flow effect from change in net working capital expected : What is the cash flow effect from the change in net working capital expected to be at time 1?
Expected after-tax cash flow from selling piece of equipment : What is the expected after-tax cash flow from selling a piece of equipment if Litchfield Design purchases the equipment today for 60,000 dollars,

Reviews

Write a Review

Financial Management Questions & Answers

  Under what circumstances will the option be exercised

An investor buys a European put on a share for $3. The stock price is $42 and the strike price is $40. Under what circumstances does the investor make a profit? Under what circumstances will the option be exercised? Draw a diagram showing the variati..

  What was the fund turnover

A mutual fund sold $75 million of assets during the year and purchased $99 million in assets. If the average daily assets of the fund were $316 million, what was the fund turnover?

  Stock according to the security market line

What is your total return on the stock? What is the dividend yield? What is the capital gains yield and what is the expected return of the stock according to the security market line?

  What challenges may this firm have encountered

Select a publicly traded firm of your choice that enjoys a large shareholder base. What challenges may this firm have encountered

  Examples of purchasing power parity

Give insightful conclusions that are thoroughly defended with evidence and examples of purchasing power parity, possible types of arbitrage, and how a company will decide if the potential profits are worth the risks of going global in relation to Chi..

  The machine has no salvage value

The machine's economic life of 5 years will be depreciated straight-line to $0. The machine has no salvage value.

  Describe the role of the financial institutions

Describe the role of the financial institutions and financial markets in our economy. Differentiate between primary and secondary markets. Differentiate between money and capital markets.

  Calculate the required return for each stock

Landon Stevens is evaluating the expected performance of two common stocks, Furhman Labs, Inc., and Garten Testing, Inc. The risk-free rate is 5.5 percent, the expected return on the market is 12.8 percent, and the betas of the two stocks are 1.7 and..

  Price of underlying asset has standard deviation of zero

At expiration, the time value of an option: If the price of an underlying asset has a standard deviation of zero:

  According to the static theory of capital structure

According to the static theory of capital structure, a firm borrows up to which one of the following points

  Friend normally discounts investments cash flows

Jeremy Fenloch borrowed some money from his friend and promised to repay him the amounts of $1,290, $1,325, $1,500, $1,630, and $1,575 over the next five years. If the friend normally discounts investments cash flows at 8.50 percent annually, how muc..

  What is the worth of the fifth payment in present dollars

You just signed a business consulting contract with one of your clients. The client will pay you $50,000 a year for five years for the service you will provide over this period. what is the worth of the fifth payment in present dollars?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd