Stover Corporation,a U

question 57

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 Swiss 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 Swiss francs.If the spot rate in 90 days is actually 1.609 Swiss francs,how much in U.S.dollars will the U.S.firm have saved or lost by hedging its exchange rate exposure? Do not round the intermediate calculations and round the final answer to the nearest cent.

• A) $905.41
• B) $937.75
• C) $1077.87
• D) $1,120.98
• E) $1,261.11

---

Definitions:

National

Pertaining to or encompassing an entire nation, as opposed to being regional or local; often refers to governmental policies or initiatives at the country-wide level.

State

An organized political community under one government; a nation or territory considered as an organized political community.

Local Party Organizations

The grassroots units of political parties, operating at the local level to support party candidates and policies within specific communities.

Democratic Party

One of the two major contemporary political parties in the United States, known for its liberal positions on various social and economic issues.