If the forward transaction hedging method is used:

Because it is known that the US dollar has a six-month forward discount of 650 points, the current exchange rate is usd 1=sf 1.3240, that is,

After 6 months, the exchange rate is 1=sf 1.257.

And reach a deal with the bank at this price.

At this time, this $5 million can only be exchanged for 6.285 million SF.

(Subtraction is used for discounting)

If you use the bis method to avoid foreign exchange risk:

Step 1: The Swiss company borrows $5 million from the market, with an annual interest rate of 65,438+00% and a term of 6 months. After the expiration of six months, the Swiss company needs to repay the principal and interest: USD 5 million * (1+10% * (6/12)) = USD 5.25 million.

Step 2: Spots

speed

trade

Sold 5.25 million US dollars, according to the spot market exchange rate usd 1=sf 1.3240.

Get 6.62 million sf

Step 3: invest

Make a stable investment

Deposit 6.62 million in Swiss domestic banks for 6 months.

Income after 6 months:

6.62 million SF * (1+9.5% * (6/12)) = 6.9345 million SF.

Step 4:

This result shows that

Spent $5.25 million to earn 6.9345 million sf.

After conversion, it is usd 1=sf 1.32086.

From the above calculation, we can know that:

In the first way, the dollar depreciates more, so that less dollars are converted into the national currency sf.

The second method can avoid most of the risks.

Although it has declined.

But the loss is not much.

Therefore, in comparison, the bis method is better.

I hope the above analysis can help you:)