Answer:
B) ¥6092.53
Explanation:
We can hedge the risk by buying dollars forward contract at a price of ¥106.02/$ which is 90 days forward rate because the payment is due in 90 days. The total contract would amount to ¥106.02/$ * $377,287 = ¥39,999,967.74
The second alternative is to buy dollar at todays date. The present value of the dollars will be ;
$377,287 / 1.008125 = $374,246.25
If we buy dollars at spot rate then,
¥106.35/$ × $374,246.25 = ¥39,801,088.69
The future value of yen will be :
¥39,801,088.69 × (1.00484375) = ¥39,993,875.2
The difference between the two alternatives will be :
¥39,999,967.74 - ¥39,993,875.2 = ¥6092.53
