Question

On June 1st, 2020, Ford expects to ship 100,000 boxes of parts from its Canadian subsidiary...

On June 1st, 2020, Ford expects to ship 100,000 boxes of parts from its Canadian subsidiary to its US dealers on 270-day terms at $500 per box. Therefore, Ford will receive $ payments from these outlets on February 26th, 2021. Assuming that Ford needs to cover its C$ expenses in Canada and thus wants to hedge its C$/$ exposure using a forward contract with Citibank, what is the minimum amount of C$s they should receive on February 26th, 2021 given the 9-month forward rate you calculated in problem one for one $ in terms of C$? What are two other ways Ford might hedge its C$/$ exposure?

Homework Answers

Answer #1

Note - I have recieved this question earlier also. Hence Uploading the same again.

Forward rate missing in this Question hence taken from Earlier Solution.

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