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1 ) ( 6 pts ) Assume that Stevens Point Co . has net payables of 2 0 0 , 0 0 0 Singapore dollars
pts Assume that Stevens Point Co has net payables of Singapore dollars in days. The spot rate of the S$ is US$S$ and the Singapore periodic interest rate is over days annual rate is per year, so periodic rate is per days Assume US periodic interest rates of over days or annual rate is so periodic rate is per days If the US firm could implement a money market hedge, what is the cost of the payables in US dollars in days using a money market hedge? Assume borrowing and lending rates are the same for simplicity. Be precise. pts Assume that Vermont Co has net receivables of Mexican pesos in days. The Mexican periodic interest rate is over days annually and the spot rate of the Mexican peso is $ MXN Assume US periodic interest rates of over days or annual rate is so periodic rate is per days What is the US dollar value of the receivables in days if the firm uses a money market hedge? Assume borrowing and lending rates are the same for simplicity. Be precise. pts Assume that Loras Corp. imported goods from New Zealand and needs New Zealand dollars days from now. It is trying to determine whether to hedge this position. Loras has developed the following probability distribution for the New Zealand dollar: Possible Value of New Zealand Dollar in Days Probability $ The day forward rate of the New Zealand dollar is US$NZD The spot rate of the New Zealand dollar is US$NZD Develop a table showing a feasibility analysis for hedging. That is determine the possible differences between the costs of hedging versus no hedging. What is the probability that hedging will be more costly to the firm than not hedging? pts If hedging is expected to be more costly than not hedging, why would a firm even consider hedging? pts Forward versus Money Market Hedge on Payables. Assume the following information: day US interest rate per days or per year compounded quarterly day Malaysian interest rate per days or per year compounded quarterly Assume borrowing and lending rates are the same for simplicity. day forward rate of Malaysian ringgit $MYR Spot rate of Malaysian ringgit $MYR Assume that the Santa Barbara Co in the United States will need ringgit in days. It wishes to hedge this payables position. Would it be better off using a forward hedge or a money market hedge? Substantiate your answer with estimated costs for each type of hedge. pts Forward versus Money Market Hedge on Receivables. Assume the following information: day US interest rate per days or per year compounded semiannually day British interest rate per days or per year compounded semiannually day forward rate of British pound $ Spot rate of British pound $ Assume that Riverside Corp. from the United States will receive pounds in days. Would it be better off using a forward hedge or a money market hedge? Substantiate your answer with estimated revenue for each type of hedge.
pts Assume that Stevens Point Co has net payables of Singapore dollars in days. The spot rate of the S$ is US$S$ and the Singapore periodic interest rate is over days annual rate is per year, so periodic rate is per days Assume US periodic interest rates of over days or annual rate is so periodic rate is per days If the US firm could implement a money market hedge, what is the cost of the payables in US dollars in days using a money market hedge? Assume borrowing and lending rates are the same for simplicity. Be precise.
pts Assume that Vermont Co has net receivables of Mexican pesos in days. The Mexican periodic interest rate is over days annually and the spot rate of the Mexican peso is $ MXN Assume US periodic interest rates of over days or annual rate is so periodic rate is per days What is the US dollar value of the receivables in days if the firm uses a money market hedge? Assume borrowing and lending rates are the same for simplicity. Be precise.
pts Assume that Loras Corp. imported goods from New Zealand and needs New Zealand dollars days from now. It is trying to determine whether to hedge this position. Loras has developed the following probability distribution for the New Zealand dollar:
Possible Value of
New Zealand Dollar in Days Probability
$
The day forward rate of the New Zealand dollar is US$NZD The spot rate of the New Zealand dollar is US$NZD Develop a table showing a feasibility analysis for hedging. That is determine the possible differences between the costs of hedging versus no hedging. What is the probability that hedging will be more costly to the firm than not hedging?
pts If hedging is expected to be more costly than not hedging, why would a firm even consider hedging?
pts Forward versus Money Market Hedge on Payables. Assume the following information:
day US interest rate per days or per year compounded quarterly
day Malaysian interest rate per days or per year compounded quarterly
Assume borrowing and lending rates are the same for simplicity.
day forward rate of Malaysian ringgit $MYR
Spot rate of Malaysian ringgit $MYR
Assume that the Santa Barbara Co in the United States will need ringgit in days. It wishes to hedge this payables position. Would it be better off using a forward hedge or a money market hedge? Substantiate your answer with estimated costs for each type of hedge.
pts Forward versus Money Market Hedge on Receivables. Assume the following information:
day US interest rate per days or per year compounded semiannually
day British interest rate per days or per year compounded semiannually
day forward rate of British pound $
Spot rate of British pound $
Assume that Riverside Corp. from the United States will receive pounds in days. Would it be better off using a forward hedge or a money market hedge? Substantiate your answer with estimated revenue for each type of hedge.
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