Stover Corporation, a U

question 30

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 1.638 francs, how much will the U.S. firm have saved or lost in U.S. dollars by hedging its exchange rate exposure?

• A) -$396
• B) -$243
• C) $0
• D) $243
• E) $638

---

Definitions:

Traumatic Event

An experience or occurrence that is emotionally distressing and life-altering, potentially leading to lasting psychological impact.

Early Childhood

A period in human development that spans from birth to 8 years of age, characterized by rapid physical, cognitive, and socio-emotional growth.

Mentally Ill

A term used to describe individuals with a wide range of mental health conditions that affect mood, thinking, and behavior.

Medications

Substances used to diagnose, treat, or prevent illness and improve health conditions.