Question
A New Zealand Company Fonterra Cooperative also owes another USA exporter Alto Dairy Inc USD150,000, due in three months. The following information is available: Current
A New Zealand Company Fonterra Cooperative also owes another USA exporter Alto Dairy Inc USD150,000, due in three months. The following information is available: Current spot exchange rate (NZD/USD) 1.3819 1.3869 Expected spot exchange rate (NZD/USD) 1.3919 1.3969 Premium on USD 3 months Call option 1% Premium on USD 3 months Put option 1% Exercise exchange rate 1.3944 Time to expiry 3 months i) Calculate Fonterra Cooperative expected value of NZD receivables under an option hedge. (5 marks) ii) Calculate Fonterra Cooperative expected value of NZD receivables if no option hedge is taken.
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Take The Trade A Floor Trade
Authors: Tony Wilson
1st Edition
979-8218195458
