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Your company expects to receive 5,000,000 Japanese yen 60 days from now. You decide to hedge your position by selling Japanese yen forward. The current spot rate of the yen is .0089 USD/JPY, while the
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Your company expects to receive 5,000,000 Japanese yen 60 days from now. You decide to hedge your position by selling Japanese yen forward. The current spot rate of the yen is .0089 USD/JPY, while the forward rate is .0095 USD/JPY. You expect the spot rate in 60 days to be .0090 USD/JPY. How many dollars will you receive for the 5,000,000 yen 60 days from now?

User Price Jones
by
4.1k points

1 Answer

6 votes

Answer:

$47,500

Step-by-step explanation:

Calculation for How many dollars will you receive

Using this formula

Dollar to receive=Expected Japanese yen×Forward rate

Let plug in the formula

Dollar to receive= ¥5,000,000 x $.0095/¥

Dollar to receive= $47,500

Therefore the amount of dollars will you receive will be $47,500

User Artur Grigio
by
4.9k points
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