Homework answers / question archive / Suppose another U

Suppose another U

Finance

Share With

Suppose another U.S. company knows that it will have to pay five million pounds in three months for goods it has purchased from a British supplier. The U.S. company would like to hedge its exposure to exchange rate risk. Spot 1-month Forward 3-month Forward 6-month Forward Price ($/£) 1.8878 1.8885 1.8897 1.8906 Should the firm buy or sell the forward contract? sell forward contract buy forward contract sell at spot price O buy at Spot price