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4. As the CFO of INTERFIN you decide to hedge a future payable of 400,000 USD 90 days from now. Assume that three-month call options
4. As the CFO of INTERFIN you decide to hedge a future payable of 400,000 USD 90 days from now. Assume that three-month call options on USD are available, with an exercise price of 105 ALL and a premium of 1 ALL per unit. a. In the following table, fill in the required information based on the listed possible spot rates of the US dollar after 90 days. Show your calculations to receive credit. COST OF PAYABLE IN ALL (IF NO HEDGE) NET PROFIT (LOSS) TO INTERFIN (FROM CALL OPTIONS) COST OF PAYABLE IN ALL (IF HEDGED WITH CALL OPTIONS) POSSIBLE SPOT RATE OF USD DOLLAR AFTER 90 DAYS ALL 100 ALL 103 ALL 105 ALL 108 ALL 110 b. Draw the contingency graph of the call options (alone), cost of payable in ALL (if no hedge) and the cost of payable (if hedged with call options). Please show critical values in the graph) c. For the forecasted spot rate of USD in 90 days presented below, calculate the expected value of the cost of payable in ALL if you decide to use the currency call option hedge. PROBABILITY POSSIBLE SPOT RATE OF USD DOLLAR AFTER 90 DAYS ALL 103 ALL 105 ALL 110 30% 30% 40% Enter
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