Stover Corporation, a U

question 9

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 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 francs. If the spot rate in 90 days is actually 1.64 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

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Definitions:

Parents

The caregivers of a child, who may be biological or adoptive mothers and fathers.

Amygdala

A region of the brain involved in experiencing emotions, particularly fear and pleasure.

Emotional Importance

The significance or value that individuals attach to certain emotions or feelings in their lives.

Holocaust Survivors

Individuals who lived through the systematic persecution and murder of six million Jews and millions of others by the Nazis and their collaborators during World War II.