. Assume Rivera’s portfolio was perfectly hedged. It is now time to rebalance the portfolio and roll the currency hedge forward one month. The relevant data for rebalancing are provided in Exhibit 1.Exhibit 1:
Portfolio and Relevant Market Data
One Month AgoTodayPortfolio value of assets (USD)2,500,0002,650,000USD/EUR spot rate (bid–offer)1.1713/1.17141.1575/1.1576One-month forward points (bid–offer)9/106/7
Calculate the net cash flow (in euros) to maintain the desired hedge. Show your calculations.
