6. Company ABC commits to sell $10 million of its product (produced in the US wi

Question

6. Company ABC commits to sell $10 million of its product (produced in the US with raw materials from the US) to a Japanese customer delivered within 60 days from today with payment to be received 90 days from today in yen. What are the risks faced by ABC? What are the events in the currency markets which would erode the profitability of this sale? How can ABC protect itself from the adverse consequences of currency market fluctuations? 7. Distinguish between forward contracts, futures, options, caps, collars and swaps as currency risk management tools. 8. What are the advantages of futures contracts as compared to currency forward agreements?

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Posters rating is not 100%. Hence Pl dont answer this post as this person has been irresponsible in rating answers. So he don't deserve any solutions here. First make him rate all pending posts truthfully & also pledge that he will rate all answers within 2 days to be eligible for help from Educators & others. Till such time, just ignore all posts where rating is not 100%. This will make Cramster a better forum to contribute. Amen...

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