Advanced Micro Devices - Moderated (AMD) Message Board

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Technology Stocks : Advanced Micro Devices - Moderated (AMD)

AMD 207.58

-1.5%

3:59 PM EST

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To: brushwud who wrote (10357)	9/27/2000 11:10:46 AM
From: AK2004	of 275872

Brushwud re:No, it's actually true. IMHO, that may not be accurate observation Let's take a simple example when the cost is Euro-based and the products is in US $: your product is sold for $1US your cost of production is $1EU initial exchange is 1 for 1 the net profit after conversion = 0 euro lost 20% relative to US <=> 1 for 1.20 exchange new net profit after conversion 1 - 1/1.2=$.17US or 1.2 - 1 = .2 Euro But what would happened if the exchange ratio turns 1.2 for 1? One example of hedging is entering into forward for euro. That contract would act similar to insurance and that would be hedging otherwise you are just betting on exchange rate. JMHO Regards -Albert ps the assumption of the time difference between product cost and sales

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