What is the expected gain-loss from a forward hedge


Problem

Cray Research sold a supercomputer to the Max Planck Institute in Germany on credit and invoiced €13.60 million payable in six months. Currently. the six-month forward exchange rate is $1.28i€ and the foreign exchange adviser for Cray Research predicts that the spot rate is likely to be $1.232e in six months.

• What is the expected gain/loss from a forward hedge?

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