Stover Corporation, a U

question 26

Multiple Choice

Stover Corporation, a U.S. based importer, makes a purchase of crystal glassware from a firm in Switzerland for 39,960 Swiss francs, or $24,000, at the spot rate of 1.665 Swiss francs per dollar. The terms of the purchase are net 90 days, and the U.S. firm wants to cover this trade payable with a forward market hedge to eliminate its exchange rate risk. Suppose the firm completes a forward hedge at the 90-day forward rate of 1.682 Swiss francs. If the spot rate in 90 days is actually 1.64 Swiss francs, how much will the U.S. firm have saved or lost in U.S. dollars by hedging its exchange rate exposure?

• A) $399
• B) $444
• C) $493
• D) $548
• E) $608

---

Definitions:

Autoimmune Theory

A theory suggesting that certain diseases or conditions are caused by the immune system mistakenly attacking the body's own healthy cells and tissues.

Alzheimer Disease

A progressive neurological disorder that causes brain cells to waste away and die, leading to a continuous decline in thinking, behavioral, and social skills.

Life Expectancy

The average period that a person may expect to live, often influenced by factors like genetics, lifestyle, and environment.

Life Expectancy

The average period that a person may expect to live, often calculated from the time of birth based on a wide range of demographic factors.