In 1996,DEC Hedges a FF 3

question 29

Multiple Choice

In 1996,DEC hedges a FF 3.2 million receivable due in 180 days.The current spot rate is FF 1 = $0.18834 and the 180-day forward rate is FF 1 = $0.18625.If the spot rate at the end of 180 days is $0.18728,how much has the forward market hedge cost DEC?

• A)$6,688
• B)$3,392
• C)$3,296
• D)DEC gains $6,688 on the hedge

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