One 41,000-dollar roaster, a 90-day wait and a peso that moves ten percent either way: the Unit 6 currency exposure exercise for MT220, with every step worked. Searches like "mt 220 unit 6 assignment example", "mt220 unit 6 sample" and "mt220 unit 6 example" land here.
What a finished MT220 Unit 6 currency exposure exercise looks like
Four pages of numbered problems, each showing the given values, the calculation and a one-sentence interpretation. Problem one converts the price at spot: 168.1 million pesos. Problem two assumes the sale is invoiced in pesos and recomputes the dollars received when payment arrives, 37,273 if the peso weakens ten percent and 45,556 if it strengthens by as much. Problem three sets those receipts against a composite 28,700-dollar cost to build and ship, showing a 12,300-dollar margin falling to 8,573, a loss of about 30 percent from a 10 percent currency move. Problem four derives a 90-day forward rate from interest rates in the two countries. Problem five prices the hedged outcome, and a short final section compares three responses: the forward, dollar invoicing and a price adjustment clause.
How a MT220 Unit 6 example is structured
Arithmetic comes first and judgment last. Early problems establish the exposure: the firm carries currency risk only if it invoices in pesos, and the first two problems show that plainly. The margin problem carries the central lesson, since a cost base fixed in dollars turns a 10 percent rate change into a far larger swing in profit, and the solution states the ratio outright. The forward problem uses interest rate parity with bracketed rates of [9] percent in Colombia and [4] percent in the United States, producing a forward near 4,151 pesos, and it notes that offshore peso forwards are usually non-deliverable, settled in dollars. The hedged margin, about 11,800 dollars, shows the price of certainty. A comparison section then weighs who bears the risk under each response, and the recommendation invoices machines in dollars and spare parts in pesos.
Exposure exists only in pesos
Invoiced in dollars, the Tacoma firm receives 41,000 whatever the rate does, and the distributor carries the risk instead. The exercise states this before any calculation, since everything after it applies only to a peso invoice.
Ten percent in, thirty percent out
A 12,300-dollar margin on a 41,000-dollar sale means costs absorb most of the price. When the peso weakens ten percent, the shortfall of about 3,700 dollars comes entirely out of margin, which falls by roughly 30 percent.
A forward from two interest rates
Interest rate parity turns a spot rate of 4,100 into a 90-day forward near 4,151, because peso deposits pay more than dollar deposits. The solution shows the formula, the substitution and the bracketed rates used.
Certainty, priced
Locking the forward yields about 40,500 dollars and a margin near 11,800, some 500 below the unhedged figure if spot never moves. The exercise calls that difference the cost of removing the downside.
Who carries the risk
Dollar invoicing shifts exposure to the distributor, who may pass it to growers through higher peso prices. A price adjustment clause shares it within a band. The recommendation splits machines and spare parts between the two currencies.
Where marks go in MT220 Unit 6
An exercise that ends by remarking that rates fluctuate loses the most marks in MT220's currency unit; the prompt usually asks what a specific movement does to a specific result. Arithmetic is read line by line in many sections, so a solution showing only answers, with no formula or substitution, forfeits partial credit even when correct. Confusing the direction of a quote, treating pesos per dollar as dollars per peso, produces results off by orders of magnitude and is marked hard. Papers computing revenue but never margin miss the point of the unit. Hedging advice without a priced alternative, such as simply telling the firm to hedge, draws deductions on the recommendation. Interpretation sentences count as well: a number left unexplained earns less than one tied to a decision.
Get a MT220 Unit 6 example written to your instructions
Send the problem set or scenario Unit 6 gives you, the exchange rates your prompt specifies, and the rubric. Every calculation in the custom solution is shown line by line, with an interpretation after each result and a priced comparison of responses at the end. It arrives in 24-48h, free for a first request, using your case's numbers wherever the case provides them.
MT220 Unit 6 questions, answered
Should the exercise use real exchange rates?
Use whatever the prompt supplies. Where it leaves rates open, a current spot rate from a central bank or a major data provider, cited with its date, grounds the exercise. Scenario rates, such as ten percent weaker, are assumptions and should be labeled that way. Mixing a real spot rate with invented forwards without saying so confuses the reader.
What is a non-deliverable forward?
A forward contract settled in a major currency, usually dollars, rather than by exchanging the local currency itself. It is common for currencies with limits on offshore trading, and banks outside Colombia typically use one for pesos. On the settlement date the parties pay only the difference between the agreed rate and the market rate, applied to the notional amount.
How should interest rate parity appear in the solution?
Formula first: forward equals spot multiplied by one plus the foreign rate, divided by one plus the home rate, each scaled to the contract's length. Substitute the values, show the result, then add a sentence on direction, since the currency with the higher interest rate trades at a forward discount. A bare number gives a grader no method to credit.