Assume That Kramer Co The Probability That the Forward Hedge Will Result in More

Multiple Choice

Assume that Kramer Co. will receive SF800,000 in 90 days. Today's spot rate of the Swiss franc is $.62, and the 90-day forward rate is $.635. Kramer has developed the following probability distribution for the spot rate in 90 days:
$$\begin{array}{l}\text { Passible spot Fate }\\\begin{array} { c c } \text { in 90 D.4 } & \text { Probabilit } \\ .61 & 10 \% \\\$ .63 & 20 \% \\\$ .64 & 40 \% \\\$ .65 & 30 \%\end{array}\end{array}$$
The probability that the forward hedge will result in more dollars received than not hedging is:

A) 10%.
B) 20%.
C) 30%.
D) 50%.
E) 70%.