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4. Worksheet #4 - Options Market Hedge Replicate the graph with 3 lines shown in Exhibit 8.10. In doing so, use the same data
4. Worksheet #4 - Options Market Hedge Replicate the graph with 3 lines shown in Exhibit 8.10. In doing so, use the same data in the textbook. a. In column A, you create future spot exchange rates ranging from 0 to 3.00 with an increment of 0.10. b. In column B, you show the dollar amounts you pay for your accounts payable using a forward contract. c. In column C, you show the dollar costs you pay for your accounts payable using a money market hedge. d. In column D, you show the dollar amounts you pay for your accounts payable using speculation (strategy). e. In column E, you might show profit or loss from your long position in call option f. In column F, you show the dollar amounts you pay for your accounts payable using an options market hedge (sum of a short position in spot (Column D) and a long position in the call option (Column E). g. Draw 3 lines (B, C, and F) against A (horizontal axis). It is important to understand that profit (or loss) from your long position in call option reduce (or increase) the dollar amount you must pay for accounts receivable.
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