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(b) TBL Inc., is a U.S. company that imports Germany goods. It plans to use currency derivatives to hedge payables of 100,000 in 60 days.
(b) TBL Inc., is a U.S. company that imports Germany goods. It plans to use currency derivatives to hedge payables of 100,000 in 60 days. The possible spot for in 60 days are as below: Possible Spot for in 60 days $1.60 $1.65 $1.70 $1.75 i. Suppose the forward rate is $1.65/. How can TBL Inc. hedge its position by using forward contract? What will be TBL's gain/loss from hedge? 5 (5 marks) ii. Suppose the option exercise price is $1.65/ and the premium is $0.02 per unit. How can the TBL Inc. hedge its position by using options? What will be TBL Inc.'s gain/loss from hedge
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