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A U.S. based MNC has contracted to sell 50 million electronic chips to a British...

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Accounting

image A U.S. based MNC has contracted to sell 50 million electronic chips to a British firm for 22 each. The chips are to be delivered and paid for in 4 months. The current exchange rate between the and the $ is 1.00 equals $1.2015. At today's exchange rate how much will the firm be paid for the chips in dollars? Consider the information provided in \#1 above. In three months, when the chips are delivered and paid for, the exchange rate is 1.00 equals $1.1936. How many dollars will the U.S. firm receive for the chips? Consider the information provided in \#1 and \#2 above. Carefully explain how the U.S. firm could use (1) a forward contract for foreign exchange, (2) a futures contract for foreign exchange, and (3) an option contract for foreign exchange to hedge their position to protect their profits for this transaction

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