A U.S. based MNC has sold its product (invoiced in US dollar) to a firm in UK. The invoice amount is USD 20 mn. The payment is due three months from now. The current spot rate is USD/GBP 0.5354. It is expected that US dollar will depreciate by 7% over the three months period.The three month forward rate as quoted is USD/GBP 0.55. What is the expected loss to British firm, and how it can be hedged
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