Consider a U.S. investor who owns a portfolio of Japanese securities worth 160 million. In order to

Question:

Consider a U.S. investor who owns a of Japanese securities worth ¥160 million. In order to hedge currency risk, he considers buying currency puts on yen instead of selling futures contracts. In Philadelphia, a yen put with a of SO.62 per 100 yen and three-month is worth $0,007 per 100 yen (0.007 cents per yen). The current is ¥158/$.
Assume that three months later the is still worth ¥160 million. Compare the results of the following two currency-hedging strategies for values of the three months later of ¥140/$, ¥150/$, ¥158/$, ¥170/$, and ¥180/$. In the first strategy, the investor sells ¥160 million forward; in the second strategy, he buys yen puts for ¥160 million. Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity. Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...