Question
Boeing Corporation exported a Boeing 7 8 7 to British Airways and just has 2 0 mil receivable in one year . The financial management
Boeing Corporation exported a Boeing 787 to British Airways and just has 20 mil receivable in one year. The financial management of the company plan to hedge the FX risk through money market based on the current available information shown below:
The US interest rate 6.00% per annum The UK interest rate 9.00% per annum The Spot exchange rate $ 1.50/ The forward exchange rate $ 1.46/
Based on the above case, if Boeing decide to use FX options to hedge the FX risk for the 20 mil receivable. The company should purchase _________ (call or put) options. The option purchased has a strike price of $1.46/, and a premium of $.02/.
(a) What would be the companys net dollar proceeds if the spot rate 1 year later is $1.56/ ? Tip: please consider the future value of option price
(b) What would be the companys net dollar proceeds if the spot rate 1 year later is $1.44/ ?
Boeing Corporation exported a Boeing 787 to British Airways and just has 20 mil receivable in one year. The financial management of the company plan to hedge the FX risk through money market based on the current available information shown below:
Based on the above case, if Boeing decide to use FX options to hedge the FX risk for the 20 mil receivable. The company should purchase _________ (call or put) options. The option purchased has a strike price of $1.46/, and a premium of $.02/.
Tip: please consider the future value of option price
(b) What would be the companys net dollar proceeds if the spot rate 1 year later is $1.44/ ?
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