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Hi please show all work Assume the following information: 90 day U.S. Interest Rate 90 day Malaysian interest Rate 90 day forward rate on Malaysian
Hi please show all work
Assume the following information: 90 day U.S. Interest Rate 90 day Malaysian interest Rate 90 day forward rate on Malaysian Ringgit Spot rate of Malaysian Ringgit Call Option Strike Price of $.39, Premium of Put Option Strike Price of $.41, Premium of 4% 3% 0.4 0.404 0.01 0.02 Assume that the Bank of Lawrence in the USA will need 500,000 ringgit in 90 days. It wishes to hedge this position in payables. The Bank projects the following Spot rates and Probabilities: 90 Spot Forecast of Spot Rate Probability 0.39 0.4 0.42 0.45 40% 20% 20% 20% Would it be better off with a forward hedge, option hedge, no hedge or money market hege? Show work to substantiate your answer Assume the following information: 90 day U.S. Interest Rate 90 day Malaysian interest Rate 90 day forward rate on Malaysian Ringgit Spot rate of Malaysian Ringgit Call Option Strike Price of $.39, Premium of Put Option Strike Price of $.41, Premium of 4% 3% 0.4 0.404 0.01 0.02 Assume that the Bank of Lawrence in the USA will need 500,000 ringgit in 90 days. It wishes to hedge this position in payables. The Bank projects the following Spot rates and Probabilities: 90 Spot Forecast of Spot Rate Probability 0.39 0.4 0.42 0.45 40% 20% 20% 20% Would it be better off with a forward hedge, option hedge, no hedge or money market hege? Show work to substantiate yourStep by Step Solution
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