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If You Sell USD 3-Month Forward to a Client Against

question 166

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If you sell USD 3-month forward to a client against EUR, what should you do to hedge your position?


Definitions:

Manufacturing Overhead

The indirect costs related to manufacturing that cannot be directly tied to a specific product, including costs of maintenance, electricity, and equipment depreciation.

Predetermined Overhead Rate

An estimated overhead rate used to allocate manufacturing overhead costs to products, calculated before the start of a period.

Machine-Hours

A measure of production output or activity based on the total hours that machines are operating.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the manufacturing process of a product.

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