-based importer, RRT Corporation, makes a purchase of crystal glassware from a firm in Japan for 200,000 yens payable in 90 days. The U.

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A U.S.-based importer, RRT Corporation, makes a purchase of crystal glassware from a firm in Japan for 200,000 yens payable in 90 days. The U.S. firm wants to cover this amount with a forward market hedge to eliminate its exchange rate risk. Suppose the firm completes a forward hedge at the 90-day forward rate of 105 yens per dollar. If the spot rate in 90 days is actually 108 yens per dollar, how much will the U.S. firm have saved or lost in U.S. dollars by hedging its exchange rate exposure?

Select one:

a. A loss of $52.91

b. A loss of $47.11

c. A loss of $44.08

d. A gain of $47.11

e. A gain of $52.91

f. A gain of $44.08

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