A german corporation finalized a sale to a thai client on, Ask an Expert

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A German corporation finalized a sale to a Thai client on April 15. The German corporation will deliver some gardening equipment on May 31 and will be paid 345 million baht on June 30. The current spot exchange rate is 40 baht/euro. The German corporation is worried about a depreciation of the baht in the coming two months and wishes to sell those baht forward against euros.

a. Give some reasons why the German corporation should use forward rather than futures currency contracts.

b. Exactly what contract should the German corporation arrange with its bank?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93051496

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