Hedging Transactions Involving Foreign Exchange Risk – A Primer: Falling in Love with a Puerto Vallarta Condo (Part B)

© 2015 Prof. Farok J. Contractor, Rutgers University

CASE STUDY (B): The Mexican Sellers’ Perspective

The two case studies presented examine foreign exchange risk from two perspectives:

(Part A) An American couple has put a down payment on a lovely new condo in Puerto Vallarta, agreeing to pay 5,000,000 Mexican pesos on delivery of the condo in 12 months. 

(Part B) But the next day, they have second thoughts and offer the Mexican real estate developer $307,000 instead. The Mexican firm needs to consider the foreign exchange risk from its perspective—while ensuring the sale. … CONTINUED ON ARCHIVE

(Part C) Epilogue

Printable Version: Hedging Transactions_Part B_FJContractor_2015