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On January 2d, 2012, SWATCH expects to ship 500,000 watches from its plant in Switzerland to the US, which it will sell through US dealers on 270-day terms at $75.00 each. Thus SWATCH will receive payment from its dealers on September 27th, 2012. Assuming that SWATCH needs to cover its expenses in Switzerland and thus wants to hedge its SF exposure using a forward contract with a Swiss bank in the US, what is the
minimum amount of SF they should receive on September 27th, 2012 given the nine month forward rate for one US dollar in terms of SF that you calculated in problem one? What are two other ways SWATCH might hedge their SF/US$ exposure?

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Macroeconomics, Economics

Category:- Macroeconomics
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