The current spot rate is $US0.8543/$A. The one-year forward rate is $US0.8475/$A. A U.S. exporter denominates its exports to Australia in $A and expects to receive $A600,000 in one year. What is the value of these exports in one year in $US given that the firm executes a forward hedge?
A)$US 508,500
B)$US 512,580
C)$US 707,965
D)$US 702,329

Question

Quizplus · Accepted Answer

The value of the exports in one year in $US using the forward rate is calculated as $A600,000 * $US0.8475/$A = $US 508,500.

The Current Spot Rate Is $US0