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(Answer the following 5 questions using this information) Airbus sold an aircraft, A400, to Delta Airlines, a U.S. company, and billed $30 million payable in
(Answer the following 5 questions using this information) Airbus sold an aircraft, A400, to Delta Airlines, a U.S. company, and billed $30 million payable in six months. Airbus is concerned with the euro proceeds from international sales and would like to control exchange risk. The current spot exchange rate is $1.30/ and six-month forward exchange rate is $1.20/ at the moment. Airbus can buy a six-month put option on U.S. dollars with a strike price of 0.8/$ for a premium of 0.02 per U.S. dollar. In addition, Airbus can buy a six-month call option on U.S. dollars with a strike price of 0.85/$ for a premium of 0.03 per U.S. dollar. Currently, six-month interest rate is 2.5% ( 5% per annum) in the euro zone and 3.0% (6\% per annum) in the U.S. The following table shows possible Euro amount Airbus receives when the actual spot rate (first row) is realized depending on different alternative decisions. All the values are euro amount at the time when $30M is received. The number in the table refers to the question number. Look up the table to answer the question. 21,428,571 22,222,222 23,076,923 24,000,000 Look up the table to answer the question. 25,000,00027,272,72728,432,73229,000,000 Look up the table to answer the question. 24,000,00025,000,00022,964,89923,385,000 Look up the table to answer the question. 23,385,000 24,385,000 25,471,957 26,657,727 When you draw a graph for options hedge, which one show the euro equivalent amount as the exchange rate changes? Y-axis shows the euro amount of $30 million, and X-axis is the exchange rate of euro per one unit of USD. Graph A Graph B Graph C Graph D
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