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Sagot :
the payoff in 6 months will be 1725000
contract sell amount=1250000
six months forward=1.38
1250000*1.38=1725000
The risk that changes in the exchange rates between currencies will have an impact on a company's operations and profitability is known as exchange rate risk. Currency fluctuation exposes businesses to three different categories of risk: transaction risk, translation risk, and economic or operational risk.
The payoff is the profit or loss from the sale of a good or service after all selling expenses, any ongoing expenses incurred over the asset's life, and any related accounting losses have been deducted.
Both homeowners and their mortgage lenders should take note of payoff statements. They list the outstanding loan balance as well as any additional fees. Whether your future goals call for total repayment or loan consolidation, this can help you move forward with them.
The question is incomplete. The full question is:
Plains States Manufacturing has just signed a contract to sell agricultural equipment to Boschin, a German firm, for euro 1,250,000. The sale was made in June with payment due six months later in December. Because this is a sizable contract for the firm and because the contract is in euros rather than dollars, Plains States is considering several hedging alternatives to reduce the exchange rate risk arising from the sale. To help the firm make a hedging decision you have gathered the following information. refer to the information above. plains states choose to hedge their transaction exposure in the forward market at the available forward rate. the payoff in 6 months will be
Learn more about exchange rate risk here:
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