The Current Spot Rate Is $US0

question 36

Multiple Choice

The current spot rate is $US0.8543/$A. The one-year forward rate is $US0.8475/$A. A U.S. exporter denominates its exports to Australia in $A and expects to receive $A600,000 in one year. What is the value of these exports in one year in $US given that the firm executes a forward hedge?

• A)$US 508,500
• B)$US 512,580
• C)$US 707,965
• D)$US 702,329

---

Definitions:

Per Capita GDP

The measure of a country's economic output per person, calculated by dividing the Gross Domestic Product by the total population.

Upper Volta

The former name of the West African country now known as Burkina Faso, until it was renamed in 1984.

Lower Volta

A region in Ghana, characterized by the Volta River's lower part, significant for its hydroelectric projects and agriculture.

Aggregate Production

The total output of goods and services produced by an economy over a specific time period.