Suppose that the us firm alcoa sells 2 million worth of, Ask an Expert

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Suppose that the U.S. firm Alcoa sells $2 million worth of aluminum to a British firm. If the exchange rate is currently $1.50 = £1 and the British firm will pay Alcoa £1,333,333.33 in 90 days, answer the following questions.

a. What exchange-rate risk does Alcoa face in this transaction?

b. What alternatives does Alcoa have to hedge this exchange-rate risk?

c. Give a specific example of how Alcoa could hedge this exchange-rate risk.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92059829

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