Euro costs against a fixed dollar price: at [1.24] dollars per euro the premium line keeps a [31.5] percent margin, and MT433's Unit 5 brief covers three-quarters forward. Searches like "mt 433 unit 5 assignment example", "mt433 unit 5 sample" and "mt433 unit 5 example" land here.
What a finished MT433 Unit 5 currency exposure brief looks like
A two-page brief to the owner with a summary box, one sensitivity table and a response table. The summary states the exposure in a line: [348,000] euros of payables a year on 60-day terms against dollar revenue fixed by contract. The sensitivity table converts the [5.80]-euro price at [1.04], [1.16] and [1.24] dollars per euro, then adds freight, fees and duty at a bracketed all-in [15] percent. Landed cost runs [$7.16], [$7.96] and [$8.49]; margin per towel [$5.24], [$4.44] and [$3.91]; annual margin on [60,000] towels [$314,592], [$266,568] and [$234,552]. The importer's [30] percent margin floor breaks at about [1.268], noted under the table. The response table compares four answers on cost and on what each leaves exposed.
How a MT433 Unit 5 example is structured
Three questions are kept apart: what is exposed, what a plausible move costs, and what each response buys. Exposure is defined narrowly as transaction exposure on committed invoices, with no euro revenue to offset it. The sensitivity section notes that duty moves with the rate as well, since the invoice converts to dollars at the rate on the date of export, so a weaker dollar raises two lines rather than one. Four responses follow: a 60-day forward at a bracketed [1.1639], derived from dollar and euro interest rates of [4.0] and [2.0] percent; dollar invoicing, which the mill offers at a [3] percent premium, about [$12,110] a year; a price clause, which the hotel group refused; and leaving the position open. The recommendation layers forwards over three-quarters of committed orders and states what that surrenders.
Three hundred forty-eight thousand euros
Sixty thousand towels at [5.80] euros, paid 60 days after the bill of lading, make up the entire exposure. Open purchase orders are listed by month so the owner can see how much is already committed and how much is still forecast.
Two lines that move
A weaker dollar raises the converted mill price and, because duty is assessed on dollar value, the duty as well. Each ten-cent move in the rate shifts landed cost by about [67] cents a towel.
Where the floor breaks
Margin holds above the [30] percent floor at [1.24] but crosses it near [1.268]. That rate is offered as the trigger for revisiting the hotel price at renewal, not as a forecast of where the euro is heading.
Four answers, priced
Forward cover on three-quarters of the year's euros costs about [$1,006] more than converting at today's spot, dollar invoicing about [$12,110]. The price clause costs nothing but was refused; staying open costs [$32,016] if the dollar weakens to [1.24].
What cover gives up
At [1.04] an unhedged importer would gain about [$48,024] a year. Three-quarters of that gain is surrendered under the forward, and the brief argues that a fixed-price hotel contract makes certainty worth more than upside.
Where marks go in MT433 Unit 5
A currency brief gives up ground when it describes exchange rates in general and never states which invoices are exposed, in which direction and for how long. MT433 prompts usually test whether the writer saw that a buyer paying euros is hurt by a weaker dollar, and papers reversing the direction tend to be marked down sharply. The second-order effect on duty, which rises with converted value, is a frequent check. Responses listed without prices, or a forward recommended without saying what it forgoes, read as recall of terms rather than analysis. Credit rises with a trigger rate tied to the importer's own margin floor, and with an honest note that dollar invoicing shifts the exposure to the supplier, who prices it back in.
Get a MT433 Unit 5 example written to your instructions
Send the supplier's currency, price and payment terms as the Unit 5 case states them, plus whatever the buyer has promised its own customers, and the rubric. Within 24-48h a free first brief comes back showing margin at three dated rates, the trigger rate and every response priced against what it leaves open.
MT433 Unit 5 questions, answered
Which direction of exchange rate hurts an importer paying in euros?
A weaker dollar. When each euro costs more dollars, the same invoice converts to a larger dollar amount, and duty assessed on that value rises with it. A stronger dollar helps. Stating the direction plainly at the top of the brief avoids a frequent error in these papers, describing the exporter's exposure instead of the importer's.
Why not simply ask the supplier to invoice in dollars?
Because the risk does not vanish; it moves to the supplier, whose costs stay in euros, and the supplier usually prices it back in. The example's mill agrees to dollar invoicing at a three percent premium, about twelve thousand dollars a year, far more than forward cover would cost. Dollar invoicing makes sense when that premium is small or volumes are too irregular to hedge.
How much of the exposure should be hedged?
The share that is committed and certain, with a smaller share hedged on forecasts. The example covers three-quarters of committed orders because the hotel price is fixed, leaving the rest open in case volumes change. Covering forecast purchases in full can leave a buyer holding forward contracts for towels it never orders, which turns a hedge into a speculation.