Sell in order to hedge its forward obligation

Assignment Help Financial Management

Reference no: EM131869802

Today is April 1. Korea’s LG Electronics (LG) expects to receive ¥160,000,000 from a Japanese customer in 60 days. The current spot exchange rate is Won0.1250/¥. The current futures price for June delivery is Won0.1200/¥. The size of a yen futures contract is ¥10,000,000. How many futures contracts should LG buy or sell in order to hedge its forward obligation? What is LG’s net profit or loss if the spot rate in 60 days is Won0.1400/¥?

Reference no: EM131869802

Questions Cloud

Investing in vaviala-dennis hotel management stock : Luke is considering investing in Vaviala-Dennis Hotel Management Stock. What is the price of one share today (time=0)?

Determine the weights of the market portfolio : Assume also that there is a risk-free asset with return R= 2%. Determine the weights of the market portfolio.

Depreciated using straight line depreciation : Investment in new machinery and equipment will be depreciated using straight line depreciation in 5 years.

What are key selection criteria need to be considered : It is not an easy task for MNEs selecting the right candidates for international assignments. What are key selection criteria need to be considered.

Sell in order to hedge its forward obligation : How many futures contracts should LG buy or sell in order to hedge its forward obligation?

All projects company should use the same discount rate : Use 15% since after the merger for all projects the company should use the same discount rate.

What is the current value per share : An unlevered firm expects to generate and payout free cash flows of $120,000 annually in the form of dividends. What is the current value per share?

Which project or projects would you pick : If the projects are independent, and you have been advised to prioritize the IRR method, which project or projects would you pick?

Looking to buy house with monthly property taxes : Jim has an annual income of $185,000. Jim is looking to buy a house with monthly property taxes of $140 and monthly homeowner’s insurance of $70.

User Account

All Pages