2) Now suppose Boeing has a view regarding the New Zealand dollar and would like to benefit from this view, namely, Boeing believes the NZD will appreciate above 0.68 USD per NZD within 12 months. Further, Boeing would like a zero-cost hedge. In addition, Boeing would like the safety of a floor rate of exchange (should it be wrong regarding the appreciation of the NZD) of 0.62 USD per NZD. You have the information in Exhibit 2. (Well ignore bid-ask spreads in options prices in this question.)

Version Spring 2018 Now suppose Boeing has a view regarding the New Zealand dollar and would like to benefit from this view, namely, Boeing believes the NZD will appreciate above 0.68 USD per NZD within 12 months. Further, Boeing would like a zero-cost hedge. In addition, Boeing would like the safety of a floor rate of exchange (should it be wrong regarding the appreciation of the NZD) of 0.62 USD per NZD. You have the information in Exhibit 2. (We'll ignore bid-ask spreads in options prices in this question.) Exhibit 2 Maturity 12 Months Call Premium (USD per NZD) Strike (USD per NZD) Put Premium (USD per NZD) 0.0800 0.0700 0.0600 0.0500 0.0400 0.0300 0.0250 0.60 0.62 0.64 0.66 0.68 0.70 0.72 0.0250 0.0300 0.0400 0.0500 0.0600 0.0700 0.0800 Analysis Construct a zero-cost range forward hedge using options and complying with Boeing's required floor rate. Choose from the options listed in Exhibit 2 i. a. Which option (put or call) would Boeing buy? At what strike price? What is its premium in USD per NZD? Put or Call? Strike Premium per Nzo b. Which option (put or call) would Boeing sell? At what strike price? Put or Call? Strike Version Spring 2018 Now suppose Boeing has a view regarding the New Zealand dollar and would like to benefit from this view, namely, Boeing believes the NZD will appreciate above 0.68 USD per NZD within 12 months. Further, Boeing would like a zero-cost hedge. In addition, Boeing would like the safety of a floor rate of exchange (should it be wrong regarding the appreciation of the NZD) of 0.62 USD per NZD. You have the information in Exhibit 2. (We'll ignore bid-ask spreads in options prices in this question.) Exhibit 2 Maturity 12 Months Call Premium (USD per NZD) Strike (USD per NZD) Put Premium (USD per NZD) 0.0800 0.0700 0.0600 0.0500 0.0400 0.0300 0.0250 0.60 0.62 0.64 0.66 0.68 0.70 0.72 0.0250 0.0300 0.0400 0.0500 0.0600 0.0700 0.0800 Analysis Construct a zero-cost range forward hedge using options and complying with Boeing's required floor rate. Choose from the options listed in Exhibit 2 i. a. Which option (put or call) would Boeing buy? At what strike price? What is its premium in USD per NZD? Put or Call? Strike Premium per Nzo b. Which option (put or call) would Boeing sell? At what strike price? Put or Call? Strike