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2. A U.S. company has a V750 million payable due in one year to a bank in Japan. The current spot rate S(S/Y) = $0.0086/Vand
2. A U.S. company has a V750 million payable due in one year to a bank in Japan. The current spot rate S(S/Y) = $0.0086/Vand the one-year forward rate F360($/Y) = $0.0092/ The annual interest rate is 3 percent in Japan and 6 percent in the United States. a. How to implement a hedge against the yen payable using a forward contract? Compute the guaranteed dollar payment in one year using the forward hedge. b. How to implement a money market hedge against the yen payable? Compute the guaranteed dollar payment in one year using the money market hedge. c. Suppose that the U.S company decides to hedge using a one-year call option on 1750 million and paid a premium of $0.00012/ for the call option. The call option has an exercise price of $0.0086/ What would be the dollar payment in one year if the spot exchange rate S(S/ $0.0092/in one year
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