International Finance

Question 1

The nominal amount of hedged receivables = $ .80(100,000) = $ 80,000. The nominal amount of receivables if unhedged = $ .83(100,000) = $ 83,000. The real cost of hedging receivables = $ 83,000 - $ 80,000 = $ 3,000.

The nominal amount of hedged receivables = $ .80(100,000) = $ 80,000. The nominal amount of receivables if unhedged = $.75 (100,000) = $ 75,000. The real cost of hedging receivables is $ 75,000 - $ 80,000 = -$5,000.

During the weak dollar period, the yen appreciated substantially against the dollar. Thus, the dollars received from hedging yen receivables would ...