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Alpha Company will pay 100,000,000 in one year. What would be its US dollar payments in one year when Alpha using options to hedge, considering
Alpha Company will pay 100,000,000 in one year. What would be its US dollar payments in one year when Alpha using options to hedge, considering time value of money. Explain what should this company do at the end of that year.
spot rate: $1.27/ ; one year forward rate: $1.44/ ; call option on with a strike of $1.43, premium is $0.09
annually risk free rate: US: 4.5%, UK: 6.9%
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