Suppose PepsiCo Hedges a ¥1 Billion Dividend It Expects to Receive

question 3

Multiple Choice

Suppose PepsiCo hedges a ¥1 billion dividend it expects to receive from its Japanese subsidiary in 90 days with a forward contract.The current spot rate is ¥150/$1 and the 90-day forward rate is ¥149/$1.If the spot rate in 90 days is ¥154/$,how much has this forward market hedge cost PepsiCo?

• A)$173,160
• B)$44,743
• C)Pepsi gains $173,160 from the forward contract
• D)Pepsi gains $217,903 from the forward contract

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Definitions:

Physical Attractiveness

The degree to which a person's physical traits are considered aesthetically pleasing or beautiful by others.

Interpersonal Attraction

The force that draws people together, leading to friendships and romantic relationships, influenced by factors such as physical attractiveness, similarity, and proximity.

Reciprocal Liking

The tendency for people to like others who express liking for them, an important factor in the formation of interpersonal relationships and social bonding.

Complementary

Complementary refers to things that combine in such a way as to enhance or emphasize each other's qualities or that function together in a beneficial way.