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Hedging using Foreign Currency Derivatives Scout Finch is the Chief Financial Officer [CFO] of SALEM Manufacturing, a U. based manufacturer of gas...
Scout Finch is the Chief Financial Officer [CFO] of SALEM Manufacturing, a U.S. based manufacturer of gas turbine equipment. She has just concluded negotiations for the sale of a turbine generator to Crown, a British firm for One million pounds. This single sale is quite large in relation to SALEM’s present business. SALEM has no other current foreign customers, so the currency risk of this sale is of particular concern. The sale is made in March with payment due three months later in June. Scout Finch has collected the following financial market information for the analysis of her currency exposure problem:•
