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Assume you are an exporter in Turkey. You have sold drones worth of $50,000,000. Your receivable in US dollars is due in three months. Three-month

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Assume you are an exporter in Turkey. You have sold drones worth of $50,000,000. Your receivable in US dollars is due in three months. Three-month maturity TRY interest rate is 17% (annual) and same maturity USD interest rate is 5% (annual). For simplicity assume that the borrowing and lending interest rates are the same. Spot exchange rate is 19.41TL/US $ and three-month forward exchange rate is 22.86 TL/US $ in the foreign exchange market. The company is cash rich and has no outstanding loans. There are also currency options available in the financial market. Exercise price of a call option with a maturity of 3 months is 23.00TL per US\$. The call premium is 0.25 TL per US\$. Exercise price of a put option with a maturity of 3 months is 23.00 TL per US\$. The put premium is 0.50 TL per US\$. The exporter would definitely prefer hedging strategies, if t is expected to against the dollar in the coming next three months. Assume you are an exporter in Turkey. You have sold drones worth of $50,000,000. Your receivable in US dollars is due in three months. Three-month maturity TRY interest rate is 17% (annual) and same maturity USD interest rate is 5% (annual). For simplicity assume that the borrowing and lending interest rates are the same. Spot exchange rate is 19.41TL/US $ and three-month forward exchange rate is 22.86 TL/US $ in the foreign exchange market. The company is cash rich and has no outstanding loans. There are also currency options available in the financial market. Exercise price of a call option with a maturity of 3 months is 23.00TL per US\$. The call premium is 0.25 TL per US\$. Exercise price of a put option with a maturity of 3 months is 23.00 TL per US\$. The put premium is 0.50 TL per US\$. The exporter would definitely prefer hedging strategies, if t is expected to against the dollar in the coming next three months

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