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3. (Ch. 11) Hedging With Put Options. As treasurer of Killam Corp. (a U.S. exporter to Australia), you must decide how to hedge (if at

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3. (Ch. 11) Hedging With Put Options. As treasurer of Killam Corp. (a U.S. exporter to Australia), you must decide how to hedge (if at all) future receivables of AUD 3,000,000 (AUD: Australian dollar) after 30 days from now. Put options are available for a premium of USD .02 per unit and an exercise price of 68 AUDUSD. The forecasted AUDUSD spot rate in 90 days follows: Given that you hedge your position with options, create a probability distribution for USD to be received in 30 days. What is the USD's expected value (weighted average) for the net receivables? What is the minimum cash flow in the USD considering both the underlying and hedging positions? (15 points)

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