A US-Based Exporter Anticipated Receiving €100 Million in Six Months

question 12

Multiple Choice

A US-based exporter anticipated receiving €100 million in six months, and took a short forward position, locking-in an exchange rate of $1.38/€. If after six months, at maturity, the exporter calculates that she has made a profit of $2 million from the hedging strategy, the spot exchange rate at maturity must be

• A) $ 0.50/€.
• B) $ 1.36/€
• C) $1.40/€
• D) $ 2.00/€

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Definitions:

Personalities

The combination of characteristics or qualities that form an individual's distinctive character, influencing their behaviors, thoughts, and emotions.

Dissociative Identity Disorder

A mental disorder characterized by the presence of two or more distinct personality states or identities in an individual.

Mutually Amnesic

Characterizes a state where two or more individuals mutually have no memory of certain events or experiences.