On January 2d, 2013, Samsung expects to ship 500,000 flat screen TVs from its Ko

Question

On January 2d, 2013, Samsung expects to ship 500,000 flat screen TVs from its Korean plant to the US, which it will sell through US dealers on 270-day terms at $450 each. So Samsung will receive payment from its dealers on September 28th, 2013. Assuming that Samsung needs to cover its expenses in Korea and thus wants to hedge its Won/US$ exposure using a forward contract with a Korean bank in the US, what is the minimum amount of Won they should receive on September 28th, 2013 given the nine month forward rate for one US dollar in terms of Won that you calculated in problem one? What are two other ways Samsung might hedge their Won/US$ exposure?

Explanation / Answer

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