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XYZ Corporation, a Canadian company, imports wine from California. XYZ Corporation has a payment obligation of USD 5,000,000 that needs to be settled in 180 days. * St,0=1.35 CAD/USD. The XYZ forecasts the future spot rate in 180 days as follows: Possible Outcomes Probability A. 1.15 CAD/USD 20% B. 1.30 CAD/ USD 20% C. 1.40 CAD/USD 20% D. 1.55 CAD/USD 40% Calculate the expected amount to be paid if XYZ Corporation decides not to hedge against the spot rate movement.
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