Questions:
1. Use historical exchange rate information available on the Internet at www.oanda.com, to find interbank exchange rates between the U.S. dollar and each foreign currency for the period December 15, 2012, to January 15, 2013. Sao Paulo.
2. Determine the foreign exchange gains and losses that Portfolio no would have recognized in net income in 2012 and 2013, and the overall foreign exchange gain or loss for each transaction. Determine for which transaction it would have been most important for Portfolio no to hedge its foreign exchange
3. Portofino could have acquired a one-month call option on December 15, 2012, to hedge the foreign exchange risk associated with each of the three import purchases. In each case, the option would have had an exercise price equal to the spot rate at December 15, 2012 and would have cost $200. Determine for which hedges, if any, Portofino would have recognized a net gain on the foreign currency option.
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