International finance

Jeg er ved at læse til eksamen i International Finance og har haft en elendig lærer, jeg forstår ikke hvordan han kommer frem til svaret på dette spørgsmål. Så hvis der er nogen der forstår det og kan forklare det ville jeg være meget taknemmelig.

Omolola’s bicycles are a huge hit in Sweden and have jump started a new fashion for African-style bicycle baskets. To take advantage of this new trend, she decides to start up her own bicycle basket company in Ethiopia. This new subsidiary will not only supply baskets to her bicycle company, but will export these baskets to other Swedish bicycle makers. The demand for these baskets will depend on their price in SKK. The value of her new bicycle basket business will be either 15 million ETB or 10 million ETB, depending on the SKK/ETB exchange rate. The current spot exchange rate is 9.0 SKK/ETB and the current forward rate is 9.0 SKK/ETB. In the future, the value of the ETB can take on one of 2 possible values: 8.0 SKK/ETB or 10.0 SKK/ETB. Assume that the only source of risk is the exchange rate.

Omolola will hedge her exposure to exchange rate risk using a forward contract. What is the exposure and what is the hedged value of the Ethiopian subsidiary (in millions)?

Svaret er The exposure is -10 ETB and the hedged value equals 110 SKK. men jeg aner ikke hvordan han kommer frem til det.

På forhånd tak