Hanson Corp

question 63

Multiple Choice

Hanson Corp. frequently uses a forward hedge to hedge its British pound (£) payables. For the next quarter, Hanson has identified its net exposure to the pound as being £1,000,000. The 90-day forward rate is $1.50. Furthermore, Hanson's financial center has indicated that the possible values of the British pound at the end of next quarter are $1.57 and $1.59, with probabilities of .50 and .50, respectively. Based on this information, what is the expected real cost of hedging payables?

• A) $80,000.
• B) -$80,000.
• C) $1,570,000.
• D) $1,580,000.

---

Definitions:

Principles of Justice

Fundamental ethical guidelines that aim to ensure fairness, equity, and rights in society and the legal system.

Social Inequalities

The existence of unequal opportunities or treatment for different societal groups based on class, race, gender, age, or ethnicity.

Rawls

A philosopher known for his theory of justice which argues for the creation of a society where the least advantaged are as well off as possible.

Principles of Social Justice

Foundational guidelines aimed at ensuring equitable treatment, opportunities, and outcomes for all members of society, often addressing issues of inequality and discrimination.