Your Firm Will Be Importing a Large Order of Its

question 51

Multiple Choice

Your firm will be importing a large order of its inputs from the United States in eight months and is concerned that the Canadian dollar might fall against the U.S.dollar over that time.To hedge your risk,you decide to enter into a currency forward contract to purchase 1.5 million USD at a rate of 0.9957 CAD/USD.If the spot exchange rate in 8 months' time ends up being 0.9673 CAD/USD,what is your gain or loss from hedging compared to remaining unhedged?

• A)$0
• B)$44,230
• C)-$42,600
• D)$42,600
• E)-$44,230

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