Transaction Exposure Game: American Export (Student Template Version)

Instructions for Students:

➡️ Each method below explains "how it works".
➡️ Follow step-by-step to understand each strategy.
➡️ Use this template for your reports or project work.
➡️ Always explain both the math and why you win or lose.

Scenario:

A U.S.–based exporter will receive 100,000 NOK from a Norwegian distributor in 6 months for selling American-made bicycles.

Today's spot rate: 1 NOK = $0.10 USD
6-month forward rate: 1 NOK = $0.10 USD
U.S. annual interest rate (i$): 8%
Norway annual interest rate (iNOK): 5%
Put option strike price: 1 NOK = $0.11 USD
Put option premium: $0.01 per NOK

🚲 American Export Game: Understand Transaction Exposure (Student Version)

Instructions for Students:

Scenario:

Results for All Hedging Strategies: