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How would international structure the hedge

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International Worldwide would like to execute a money market hedge to cover a ¥250,000,000 shipment from Japan of sound systems it will receive in six months. The current exchange rate is ¥124 = $1.

a. How would International structure the hedge? What would it do to hedge the Japanese yen it must pay in six months? The annual yen interest rate is 4%.

b. The yen may rise to as much as ¥140 = $1 or fall to ¥115 = $1. What will the total dollar cash flow be in six months in either case?

Reference no: EM13508585

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