Stover Corporation,a U

question 29

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 in U.S.dollars will the U.S.firm have saved or lost by hedging its exchange rate exposure?

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

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Definitions:

Labour Organizations

Groups formed to represent the interests of workers in negotiations with employers over wages, benefits, and working conditions.

Mode Of Governance

The method or system through which an organization, state, or society is ruled or managed.

Collective Bargaining

The negotiation process between employers and a group of employees aimed at reaching agreements to regulate working salaries, working conditions, benefits, and other aspects of workers' compensation and rights.

Economic Pressures

External financial challenges that affect individuals, businesses, or economies, including inflation, unemployment, and market fluctuations.