3 . Stover Corporation , a U . S . based importer , makes a purchase of crystal glassware from a firm in Switzerland for 39,960 Swiss francs , or $ 24,000 , at the spot rate of 1.665 francs per dollar . The terms of the purchase are net 90 days , and the U . S . firm wants to cover this trade payable 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 1.682 francs . If the spot rate in 90 days is actually 1.638 francs , how much will the U . S . firm have saved or lost in U . S . dollars by hedging its exchange rate exposure ?
a . - $ 396 b . - $ 243 c . $ 0 d . $ 243 e . $ 638
4 . A product sells for $ 750 in the United States . The exchange rate is $ 1 to 1.65 Swiss francs . If purchasing power parity ( PPP ) holds , what is the price of the product in Switzerland ?
a . 123.75 Swiss francs b . 454.55 Swiss francs c . 750.00 Swiss francs d . 1,237.50 Swiss francs e . 1,650.00 Swiss francs