Use the Following Information to Calculate the Dollar Cost of Using

question 50

Multiple Choice

Use the following information to calculate the dollar cost of using a money market hedge to hedge 200,000 pounds of payables due in 180 days. Assume the firm has no excess cash. Assume the spot rate of the pound is $2.02, the 180-day forward rate is $2.00. The British interest rate is 5%, and the U.S. interest rate is 4% over the 180-day period.

• A) $391,210.
• B) $396,190.
• C) $388,210.
• D) $384,761.
• E) none of the above

Recognize the importance and scope of supplier development initiatives.

Grasp the concepts and implications of requests for information (RFI), quotations (RFQ), and proposals (RFP) in supplier selection processes.

Comprehend the use of portfolio or quadrant analysis in developing supply strategies.

Appreciate the complexities of environmental sustainability in supply chain management.

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Definitions:

Financial Risk

The possibility of losing money on an investment or business venture.

Shareholders

Individuals or entities that own shares of stock in a corporation, giving them rights to dividends and a stake in the company's ownership.

Preferred Shares

Preferred shares represent a class of ownership in a corporation with a fixed dividend and priority over common shares in asset liquidation.

Cost of Equity

The return that investors require for investing in a company's equity, representing the compensation for taking on equity risk.